Market Insights from Open Interest Data (March 27, 2025)

 

Market Insights from Open Interest Data (March 27, 2025)

Participant-Wise OI Breakdown

Total Contracts: Long and short positions are balanced at 14,180,445 contracts each, indicating no significant directional bias in aggregate OI across futures and options.

FIIs (Foreign Institutional Investors):

Future Index: Net short (60,054 long vs. 90,609 short), suggesting mild bearish positioning in index futures.

Option Index: Net long in calls (389,855 long vs. 237,666 short) and puts (462,358 long vs. 265,151 short), indicating hedging or bullish bias with put protection.Total Long: 4,622,969 vs. Total Short: 2,822,201, showing FIIs are net buyers overall, supporting the observed buying momentum on March 27.

Clients:Option Index: Balanced call/put longs (1,391,099 calls vs. 1,364,232 puts) and shorts (1,558,619 calls vs. 1,578,492 puts), reflecting indecision or range-bound expectations.

Future Index: Slightly net long (139,548 long vs. 130,712 short), aligning with retail bullishness.

DIIs (Domestic Institutional Investors):

Heavy shorting in stock futures (3,940,939 short vs. 151,326 long), but minimal activity in index options, suggesting a focus on stock-specific hedging rather than broad index bets.

Proprietary Traders (Pro):Option Index: Net long in calls (782,608 long vs. 767,347 short) and puts (680,067 long vs. 732,047 short), indicating mixed positioning with slight bullish tilt in calls.

Key Observations

FII Buying Momentum: FIIs’ net long position in options (especially puts) and sustained buying on March 27 (as noted in the outlook) signal confidence in upside potential with downside protection. This supports the buy-on-dips narrative.

Balanced OI: The near-equal long and short contracts across participants suggest consolidation rather than a strong breakout, aligning with the Nifty 50’s range-bound behavior between 23,400 and 23,800.

Put Writing: Aggressive put writing (e.g., FIIs’ 462,358 put longs vs. 265,151 shorts) indicates strong support at lower levels (23,400–23,500 for Nifty; 

51,000–51,250 for Bank Nifty), reinforcing bullish resilience.

Call Resistance: Higher call OI (e.g., FIIs’ 389,855 call longs vs. 237,666 shorts) at strikes like 23,800 (Nifty) and 51,800–52,000 (Bank Nifty) suggests resistance, potentially capping immediate upside unless a breakout occurs.

Nifty 50: Probable Movement on March 28, 2025

Current Context

Closing Level: 23,592 (up 105 points on March 27).

Technical Outlook: Sustaining above the 200-day EMA (23,400) with RSI above 60, indicating bullish momentum. The index closed near its intra-day high, reflecting buyer strength.

Support: 23,400–23,450 (200-day EMA and put writing zone); secondary support at 23,200–23,300.

Resistance: 23,800 (immediate hurdle with call OI buildup); 24,000 (psychological level and next target).

OI Insights

Balanced call/put OI suggests consolidation, but FIIs’ net long put positions (462,358 long vs. 265,151 short) indicate strong support at 23,400–23,500.

 Call OI at higher strikes (e.g., 23,800) aligns with resistance levels.The long-short ratio improvement and FII buying reinforce upside potential, though a decisive move above 23,800 is needed for short-covering toward 24,000.

Probable Movement

Base Case: Nifty 50 is likely to open flat to mildly positive and trade within a range of 23,500–23,800. The buy-on-dips strategy remains valid, with dips toward 23,400–23,450 likely to attract buying. A breakout above 23,800 could push the index to 23,900–24,000, driven by short-covering.

Bullish Scenario: If global cues are positive and FII buying persists, a sustained move above 23,800 may trigger a rally toward 24,000–24,200.

Bearish Scenario: A break below 23,400 (unlikely given current momentum) could see selling pressure toward 23,200–23,300, though this would require a significant negative trigger.

Strategy Recommendation

Buy on Dips: 

Purchase Nifty Futures or a Bull Put Spread (e.g., buy 23,750 Put, sell 23,950 Put) near 23,400–23,450. Target: 23,800–24,000; Stop-loss: 23,200 (closing basis).

Rationale: The bullish trend, FII buying, and put writing at lower strikes support this approach, with limited downside risk due to strong support.

Bank Nifty: Probable Movement on March 28, 2025

Current Context

Closing Level: 51,576 (up 367 points on March 27).

Technical Outlook: Trading above all key EMAs (20-day, 50-day, 200-day) with RSI above 70, indicating strong bullish momentum. A robust demand zone at 51,000–51,200 supports further upside.

Support: 51,250–51,000 (immediate and psychological); secondary support at 50,700–50,800.Resistance: 51,800–52,000 (immediate hurdle with call OI); 52,200–52,250 (next targets).

OI Insights

FIIs’ net long positions in index options (puts: 462,358 long vs. 265,151 short) and aggressive put writing suggest strong support at 51,000–51,250. Call OI at 51,800–52,000 (e.g., 50500 strike with 6.01 lakh contracts per X posts) indicates resistance, consistent with technical levels.The bullish candle on March 27 and FII inflows point to continued upside momentum, though RSI above 70 hints at potential overbought conditions.

Probable Movement

Base Case: Bank Nifty is expected to open flat to slightly higher and consolidate between 51,300 and 51,800. Dips toward 51,250–51,000 should see buying interest, while a breakout above 51,800 could drive the index to 52,000–52,250.

Bullish Scenario: Sustained momentum and a close above 51,800 may push the index toward 52,200–52,800, especially if banking stocks lead the charge.Bearish Scenario: A drop below 51,000 (unlikely unless triggered by a sharp negative event) could test 50,700–50,800, though current bullish sentiment makes this less probable.

Strategy Recommendation

Buy on Dips: Purchase Bank Nifty Futures near 51,000–51,250. Target: 52,000–52,250; Stop-loss: 50,700 (closing basis).

Rationale: The strong bullish candle, support from put writing, and FII buying favor upside potential, with 51,000 acting as a solid base.

Additional Considerations

Global Cues: U.S. Q4 GDP data (released March 27 at 6 PM PDT) and Asian market trends on March 28 will influence sentiment. Positive cues could amplify the bullish bias.

Volatility: Post-expiry sessions often see reduced volatility, supporting consolidation unless a breakout occurs.Buy-on-Dips Strategy: Both indices’ technical strength, FII inflows, and OI data reinforce this approach, with shallow corrections likely to be absorbed by buyers.

Conclusion

On March 28, 2025, Nifty 50 is likely to hover between 23,500 and 23,800, with upside potential to 24,000 if 23,800 is breached, and;

 Bank Nifty may trade between 51,300 and 51,800, targeting 52,000–52,250 on a breakout. The buy-on-dips strategy remains the most prudent approach, leveraging strong support levels and bullish momentum from March 27. Traders should monitor global cues and maintain strict stop-losses to manage risks effectively.

Anish Jagdish Parashar 

Indirect tax india research 

Disclaimer: Content above reflect personal views of the author and for trading and investment purposes consult your financial advisor.