Nifty 50 Poised for Volatility Amid Mixed Signals and Institutional Activity, market Overview and Nifty 50 Movement
On May 29, 2025, the Nifty 50 index exhibited cautious trading, closing at 24,833, a marginal decline of 0.07% from the previous day's close of 24,852. This followed a volatile session marked by profit booking, as the index struggled to breach the critical resistance trendline near 25,000.
Despite the slight dip, the index sustained above key moving averages, signaling underlying strength. Technical indicators, however, suggest caution, with a bearish candle formation and a negative MACD crossover indicating weakening momentum.
The Relative Strength Index (RSI) at 57.63 remains above the neutral 50 mark but shows a downward tilt, hinting at potential consolidation. If the Nifty holds above the critical support zone of 24,700, analysts project a potential rally toward 25,100–25,200. A decisive break below 24,700 could trigger a decline to 24,500–24,450 levels.
Nifty Bank Performance
The Nifty Bank index closed at 55,546, up 0.35% from 55,352 on May 27, reflecting resilience in the banking sector. The index formed a long-legged doji-like candlestick, indicating indecision among traders. It remains above key moving averages, a bullish signal, but the RSI’s negative crossover and MACD’s position above the zero line suggest fading momentum.
Resistance levels are identified at 55,710, 55,898, and 56,201, with support at 55,104, 54,917, and 54,614. Positive commentary on credit growth and expectations of a U.S. Federal Reserve rate cut later in 2025 continue to support banking stocks.
Daily Open Interest Change and Options Data
nifty 50 Options:
The Nifty 50 options market showed significant activity on May 27. The 25,000 strike held the maximum Call open interest (1.27 crore contracts), acting as a key resistance, followed by 25,500 (97.95 lakh contracts). Maximum Call writing occurred at the 24,800 strike (+41.04 lakh contracts), indicating selling pressure at lower levels, while unwinding was seen at the 24,650 strike (-52,875 contracts).
On the Put side, the 24,000 strike held the maximum open interest (1.16 crore contracts), serving as a strong support, with notable Put writing at the 24,200 strike (+24.93 lakh contracts). The Put-Call Ratio (PCR) dropped to 0.82 from 1.06, signaling a shift toward bearish sentiment as Call writing outpaced Put writing.
Bank Nifty Options: For Bank Nifty, the 56,000 strike showed the highest Call open interest (17.12 lakh contracts), marking a resistance level, with maximum Call writing at the 57,500 strike (+3.33 lakh contracts). The 55,000 strike held the maximum Put open interest (15.51 lakh contracts), acting as a key support, with significant Put writing at the 53,500 strike (+2.39 lakh contracts). This suggests traders are positioning for potential downside protection.
Index Futures and Options Variation/Daily Index Futures Variation (May 28, 2025):
FIIs were net sellers in index futures, offloading contracts worth ₹7,243 crore, with a cumulative sell-off of ₹35,159 crore. DIIs, however, were net buyers at ₹4,662 crore, partially offsetting FII selling. Proprietary traders (PRO) recorded a net buy of ₹7,911 crore, indicating mixed institutional activity.
Daily Index Options Variation:
Options data reflects heightened volatility, with FIIs selling significant Call contracts, particularly at higher strikes, reinforcing resistance at 25,000 for Nifty. The increase in Put writing at lower strikes suggests traders are hedging against potential declines. The India VIX rose 2.86% to 18.54, indicating growing market nervousness and potential for sharp price swings.
FII and DII Activity (Cash Segment, May 29, 2025)FIIs:
Foreign Institutional Investors were net sellers in the cash segment, offloading ₹5,733 crore worth of equities, continuing their bearish stance. This follows a pattern of heavy selling, with a cumulative sell-off of ₹9,249 crore over recent sessions. However, FIIs were net buyers on May 23, purchasing ₹5,392 crore, showing sporadic buying interest.
DIIs: Domestic Institutional Investors countered FII selling with net buying of ₹2,483 crore on May 29, maintaining a cumulative buy of ₹14,551 crore. This consistent DII buying has provided stability to the market amid FII outflows.Market Insights and Outlook
The Nifty 50’s inability to break the 25,000 resistance, coupled with a rising India VIX, points to increased volatility in the near term, especially with the monthly expiry on May 29.
The PCR’s decline to 0.82 reflects growing bearish sentiment, driven by aggressive Call writing. However, DII buying and selective FII inflows in prior sessions suggest pockets of optimism, particularly in banking and realty sectors. The Bank Nifty’s technical setup remains constructive, supported by positive credit growth and global rate cut expectations. Investors should monitor the 24,700 support for Nifty and 55,104 for Bank Nifty, with a buy-on-dip strategy viable if these levels hold. Conversely, a breach of these supports could signal deeper corrections. Global cues, including U.S. Fed minutes and trade developments, will continue to influence market direction.
Trading Strategy
bullish View:
Consider buying on dips near 24,700 for Nifty, targeting 25,100–25,200, with a stop-loss below 24,650.
For Bank Nifty, buy near 55,104, targeting 55,898, with a stop-loss below 54,917.
Bearish View:
If Nifty breaks below 24,700, short positions could target 24,500–24,450. For Bank Nifty, a break below 55,104 may lead to 54,614.
Hedging: Given the elevated VIX, consider hedged strategies like buying 24,800 Puts while holding long positions to protect against sudden declines.
Anish Jagdish Parashar
Indirect tax india research
Disclaimer: Investments in securities markets are subject to market risks. Read all related documents carefully before investing. Past performance is not indicative of future. Content reflects author's views and for trading proposes consult your financial advisor.
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