Wednesday, April 2, 2025

Market insights and probable Bank Nifty movement on 2nd of April 2025

 


Key Points


It seems likely that the market sentiment is bearish, driven by Foreign Institutional Investors (FIIs) selling in both cash and futures markets, with increased volatility shown by a VIX of 13.7.


Research suggests Bank Nifty may face resistance at 51,444-53,000 and could consolidate or decline if it breaks below 50,725 support, influenced by FII selling and global uncertainties.The evidence leans toward Domestic Institutional Investors (DIIs) being bullish, as they bought equities worth Rs 4,322 crore, contrasting with FIIs selling Rs 5,901 crore.


Market OverviewThe market closed lower on April 1, 2025, with the Nifty 50 down 1.5% at 23,165.70 and Sensex down 1.8% at 76,024.51, amid concerns over US tariff announcements. GIFT Nifty at 23,314 suggests a flat to positive start for April 2, but global cues like lower Asian equities and mixed US markets indicate caution.


F&O Market Participants Analysis


Analysis of Futures and Options (F&O) open interest data shows FIIs are net short in index futures, aligning with their cash market selling, while DIIs are net long, supporting a bullish stance. This divergence highlights potential market direction uncertainty, with increased fear indicated by the India VIX rising to 13.78.


Bank Nifty Movement Forecast


For Bank Nifty, which closed at 50,828, resistance levels are at 51,444, 51,667, and up to 53,020, with significant open interest at 53,000. Support is at 50,725, and a break below could lead to further downside. Given bearish technical indicators like RSI trending down and FII selling pressure, it seems likely Bank Nifty may consolidate or face downward movement in the near term.


Detailed Analysis of Market Insights and Bank Nifty Movement


Introduction


This  provides a comprehensive analysis of the Futures and Options (F&O) market participants' open interest data as of April 1, 2025, to derive market insights and forecast the movement of Bank Nifty. The analysis integrates fund flows, technical indicators, and global market cues to offer a detailed perspective for investors and traders.

Market ContextOn April 1, 2025, Indian benchmark indices experienced a decline, with the Nifty 50 closing at 23,165.70, down 353.65 points or 1.50%, and the Sensex at 76,024.51, down 1,390.41 points or 1.80%. This fall extended into the second consecutive session, driven by selling across sectors except media and telecom, amid anticipation of US President Donald Trump's reciprocal tariffs. GIFT Nifty trading at 23,314 indicates a flat to positive bias for April 2, but global markets show mixed signals: Asian equities are down due to tariff concerns, while US markets closed mixed, with the S&P 500 up 0.38% and Nasdaq up 0.87%, but the Dow Jones down 0.03%. The India VIX, a fear gauge, increased sharply by 8.37% to 13.78, signaling heightened market uncertainty.Fund flows on April 1 showed Foreign Institutional Investors (FIIs) selling equities worth Rs 5,901 crore, continuing their selling for the second session, while Domestic Institutional Investors (DIIs) bought equities worth Rs 4,322 crore for the third consecutive day. This divergence in fund flows sets the stage for analyzing F&O positions.


F&O Market Participants Data Analysis


The participant-wise open interest data, broken down by client type (DII, FII, Proprietary - Pro), provides insights into market sentiment. Below is a table summarizing key positions:Client TypeFuture Index LongFuture Index ShortFuture Stock LongFuture Stock ShortOption Index Call LongOption Index Put LongTotal Long ContractsTotal Short ContractsCash Flow (Rs crore)DII98,59831,530171,0354,010,1107065,034336,1654,142,8204,322FII52,618119,1963,607,9742,022,970734,407764,8815,389,8273,850,252-5,901Pro18,48850,510677,822267,3881,014,709887,4783,833,5673,842,199-Total302,903302,9036,711,7566,711,7564,666,2553,608,09718,451,05718,451,057-Notes on Data:The DII Future Stock Short figure (4,010,110) appears unusually high compared to Long (171,035), suggesting a possible data entry error. For analysis, we infer trends based on net positions and fund flows.Cash flow for Pro is not provided, so we focus on DII and FII.Net Positions Analysis:Future Index: DIIs are net long (98,598 - 31,530 = +67,068), indicating bullishness on index futures. FIIs are net short (52,618 - 119,196 = -66,578), and Pros are net short (18,488 - 50,510 = -32,022), suggesting bearish sentiment from FIIs and Pros.Future Stock: FIIs are net long (3,607,974 - 2,022,970 = +1,584,004), bullish on stock futures, while DIIs' data suggests net short, but given cash buying, this may be an error.Options: DIIs have more Put Long (65,034 vs. 70 Call Long), bearish. FIIs have slightly more Put Long (764,881 vs. 734,407 Call Long), also bearish. Pros have more Call Long (1,014,709 vs. 887,478 Put Long), bullish.Totals: DIIs net short overall (336,165 - 4,142,820, likely error), FIIs net long (5,389,827 - 3,850,252 = +1,539,575), Pros nearly balanced.Given FIIs' significant market impact and their net short in index futures aligning with cash selling (-5,901 crore), the market sentiment leans bearish. DIIs' bullishness in cash (4,322 crore) and net long futures contrasts, suggesting a tug-of-war.


Technical Indicators and Options Data


For Nifty 50, key levels include resistance at 23,453, 23,554, 23,718, and support at 23,125, 23,024, 22,860. It formed a bearish candle with an upper shadow, dropping below 200-day EMA, with RSI at 53.03 trending down and MACD tilting downward but positive. 


For Bank Nifty, closing at 50,828, resistance is at 51,444, 51,667, 52,026, and Fibonacci at 51,883, 53,020, with support at 50,725, 50,502, 50,143, and Fibonacci at 50,273, 49,283. It formed a bearish candle but sustained above key EMAs, with RSI at 60 tilting down and MACD positive.Options data for Bank Nifty shows maximum Call open interest at 53,000 strike (13.12 lakh contracts), acting as key resistance, and maximum Put open interest at 53,000 strike (12.4 lakh contracts), suggesting a balanced level. Call writing at 51,000 and Put writing at 50,800 indicate selling pressure at these levels.The Nifty Put-Call Ratio (PCR) dropped to 0.76 from 0.92, below 0.7, reflecting a bearish mood, as more Calls are sold than Puts, indicating selling pressure.


Global and Domestic InfluencesGlobal markets show mixed signals: US equities had gains in S&P 500 and Nasdaq, but Asian equities are down, with concerns over US tariffs. Oil prices are flat, gold up 0.5% at USD 3,133 per ounce, and the dollar index is flat, with Asian currencies mixed. These factors, combined with FII selling and increased VIX, suggest potential downside risk.



Market InsightsSentiment: FIIs' bearish stance (net short futures, selling cash) drives market weakness, while DIIs' bullishness (buying cash, net long futures) provides counterbalance. The increased VIX (13.78) and bearish technicals (Nifty below EMAs, RSI down) suggest a bearish outlook.Unexpected Detail: and fyour or investment decisions and trading proposes consult Despite DII buying, the market fell 1.5%, highlighting FIIs' dominant impact, which is unusual given historical DII support often stabilizing markets.


Controversy: The divergence between DII and FII positions could lead to volatile swings, with debates on whether domestic buying can offset global selling pressures.


Bank Nifty Movement Forecast


Given the analysis, Bank Nifty is at a critical juncture:


Resistance Levels: 51,444, 51,667, with significant resistance at 53,000 (max OI for Calls and Puts), and Fibonacci at 53,020.Support Levels: 50,725, 50,502, with further support at 50,273, 49,283.Technical View: Bearish candle with upper shadow, RSI tilting down, but above key EMAs, suggesting consolidation. However, FII selling and global tariff concerns may push it down.Forecast: It seems likely Bank Nifty will face resistance at 51,444-53,000 and may consolidate if it holds above 50,725. A break below could lead to downside, potentially testing 50,273, given bearish F&O positions and market sentiment.ConclusionThe F&O data indicates a bearish market sentiment driven by FII selling, with DIIs providing bullish counterbalance. Bank Nifty is expected to face resistance at higher levels and may consolidate or decline, influenced by global uncertainties and technical indicators. Investors should watch support at 50,725 closely for directional cues.


Anish Jagdish Parashar 

Indirect tax india.in research



Disclaimer Content reflects author's views . For investment decisions and trading proposes consult your financial advisor.


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