Analysis of Nifty 50 Probable Movement and Critical Levels

 

Analysis of Nifty 50 Probable Movement and Critical Levels

1. Open Interest (OI) Analysis

The OI data for futures and options provides insights into market positioning and sentiment:

Futures OI (July 15, 2025):

DIIs: Net long with 35,932 contracts.

FIIs: Net short with -121,820 contracts.

Proprietary Traders (Pro): Marginally net long with 2,721 contracts.

Cumulative Net OI: -83,167 contracts, indicating bearish positioning overall, driven by heavy FII shorting.

Daily Variation (July 15 vs. July 14): FIIs increased short positions by 3,320 contracts, while DIIs added 153 long contracts, reflecting continued bearish bias from FIIs.

Options OI (July 15, 2025):

Cumulative Net OI: -228,641 contracts, with FIIs (-143,880) and proprietary traders (-84,761) holding significant net short positions in index options.

Call vs. Put OI: Total OI for index calls (3,996,842 contracts) exceeds puts (3,525,806 contracts), suggesting higher call writing, typically a bearish signal as writers expect the market to stay below strike prices.

Key Strike Levels: High OI concentrations in calls at 25,500, 25,600, and 26,000 strikes indicate strong resistance zones, as call writers are defending these levels. High put OI at 25,000, 24,800, and 24,500 strikes suggests support zones where put writers are active.

PCR (Put-Call Ratio): Based on OI, the PCR is approximately 0.88 (3,525,806 puts / 3,996,842 calls). A PCR below 1 typically indicates bearish sentiment, as call writing dominates, aligning with the net short OI in futures and options.

2. FII and DII Activity

FIIs:

On July 14, 2025, FIIs sold ₹4,919.38 crore in equities (net) via stock exchanges, indicating profit-taking or risk-off behavior.

In derivatives, FIIs sold 31,346 index futures contracts (₹5,989.06 crore) against 12,827 contracts bought, reinforcing their bearish stance.

In index options, FIIs sold 3,907,097 contracts (₹728,039.89 crore) against 3,873,814 contracts bought, maintaining a net short bias.

DIIs:

DIIs are net long in futures (35,932 contracts), acting as a counterbalance to FII selling. This suggests DIIs are absorbing selling pressure, potentially stabilizing the market at lower levels.

3. Price Movement and Technical Levels

Nifty 50 Closing Price (July 15, 2025): 25,195.8, up 113.5 points (+0.45%) from July 14 (25,082.3).

Recent Trend: The Nifty 50 has been consolidating between 24,700 and 25,600 over the past month, with a slight upward bias in the last two sessions (+0.45% on July 15, +0.27% on July 14). However, the index remains below its recent high of 25,649 (June 26, 2025).

Key Support Levels:

24,800–24,900: High put OI at 24,800 and 24,500 strikes, combined with recent price action, suggests strong support here. A break below 24,800 could trigger selling toward 24,500.

24,500: Psychological and technical support, reinforced by significant put OI.

Key Resistance Levels:

25,500–25,600: Heavy call OI at 25,500 and 25,600 strikes indicates resistance. The index has struggled to sustain above 25,600 recently (e.g., June 26 high of 25,649).

26,000: A major psychological and OI-based resistance due to high call writing.

4. Global Market Context

US Indices (July 15, 2025):

Nasdaq Composite: 20,585.53 (July 11), showing a slight decline (-0.22% over recent sessions).

Dow Jones: 44,371.51 (July 11), marginally down.

S&P 500: 6,259.75 (July 11), also consolidating.

Implication: The US markets’ consolidation reflects cautious sentiment, potentially capping upside in global equities, including the Nifty 50, due to high valuations and macro uncertainties (e.g., interest rate expectations).

Nifty Bank Index: Closed at 57,006.65 (July 15), up 0.42% from 56,765.35 (July 14). Its movement often correlates with the Nifty 50, and its resilience suggests banking sector strength, which could support the Nifty 50 near current levels.

5. Probable Movement

Short-Term Outlook (1–2 Weeks):

Bearish Bias: The heavy FII shorting in futures (-121,820 contracts) and options (-143,880 contracts), combined with a PCR below 1, suggests bearish sentiment dominates. The Nifty 50 may face downward pressure if it fails to break above 25,500.

Consolidation Likely: The index is likely to consolidate between 24,800 (support) and 25,600 (resistance) unless a strong catalyst (e.g., global market rally or positive domestic data) emerges.

Downside Risk: A break below 24,800 could lead to a decline toward 24,500 or lower, especially if FII selling intensifies. The cumulative net short OI (-228,641 in options) supports this risk.

Upside Potential: A move above 25,600, supported by DII buying or a global risk-on sentiment, could push the index toward 26,000, though heavy call OI at this level may cap gains.

Key Catalysts to Watch:

Global Cues: US Federal Reserve policy updates or macroeconomic data (e.g., inflation, GDP) could influence FII flows.

Domestic Factors: Q1 FY26 Rosults or corporate earnings could impact sentiment.

Option Expiry: The July 31, 2025, expiry may lead to volatility as traders roll over positions or cover shorts.

6. Critical Levels and Trading Strategy

Support Zone: 24,800–24,900 (strong put OI, recent price support).

Strategy: Buy on dips near 24,800 with a stop-loss below 24,700, targeting 25,200–25,400.

Resistance Zone: 25,500–25,600 (high call OI, recent highs).

Strategy: Sell on rallies near 25,500 with a stop-loss above 25,650, targeting 25,000–24,800.

Breakout/Breakdown:

Upside Breakout: Above 25,600, target 26,000 with a stop-loss below 25,400.

Downside Breakdown: Below 24,800, target 24,500 with a stop-loss above 24,950.

7. Risk Factors

FII Selling Pressure: Continued FII shorting could exacerbate declines.

Global Volatility: US market consolidation or adverse global news could trigger risk-off moves.

Option Expiry Volatility: High OI in both calls and puts may lead to sharp moves as expiry nears.

Conclusion

The Nifty 50 is likely to consolidate between 24,800 and 25,600 in the near term, with a bearish bias due to FII shorting and a low PCR. Key support lies at 24,800–24,900, with a potential drop to 24,500 on a breakdown. Resistance at 25,500–25,600 may cap upside unless strong bullish catalysts emerge. Traders should monitor FII flows, global markets, and option expiry dynamics for directional cues.

Disclaimer: This analysis is based on the provided data and general market principles. Always conduct your own research and consult a financial advisor before making trading decisions.

Anish Jagdish Parashar 

Indirect tax india research