Nifty 50 Probable Movement and Critical Levels

 

Nifty 50 Probable Movement and Critical Levels Based on Open Interest Data (July 16, 2025)

This paper analyzes the probable movement of the Nifty 50 index using open interest (OI) data, futures and options activity, and broader market indices as of July 16, 2025. By examining Foreign Institutional Investors (FII), Domestic Institutional Investors (DII), and proprietary traders' (Pro) positions, we identify critical support and resistance levels and forecast potential short-term price movements.

1. Introduction

The Nifty 50 index, a benchmark for the Indian equity market, is influenced by institutional activity in futures and options markets. Open interest data, combined with price movements and global indices, provides insights into market sentiment and potential price trajectories. This analysis leverages data from the National Stock Exchange (NSE) for July 16, 2025, to predict Nifty 50 movements and identify critical levels.

2. Data Analysis

2.1 Open Interest and Futures Data

FII Positions: FIIs hold a net short position in index futures (-125,512 contracts) and index options (-146,532 contracts), indicating bearish sentiment. Their cumulative net futures position has deteriorated from -55,545 (July 1) to -84,028 (July 16), suggesting increasing bearishness.

DII Positions: DIIs maintain a net long position in index futures (+37,984 contracts), acting as a counterbalance to FII selling. However, their position has remained relatively stable, with limited aggressive buying.

Pro Positions: Proprietary traders show a marginal net long in futures (+3,500 contracts) but a significant net short in options (-96,103 contracts), indicating mixed sentiment with a bearish tilt in options.

Daily Variations: On July 16, FIIs reduced their futures short positions slightly (-861 contracts) but maintained heavy shorting in options. DIIs reduced long positions (-13,994 contracts), suggesting caution.

2.2 Price Movement

Nifty 50 Closing: The index closed at 25,212.05 on July 16, up 16.25 points from 25,195.80 on July 15, reflecting mild bullishness.

Recent Trend: The index has shown resilience, recovering from 24,620 (June 4) to 25,637.8 (June 27) before consolidating around 25,200. However, volatility increased with a 113-point gain on July 16, signaling potential momentum.

2.3 Options Data

Option Index Net: The cumulative net option index position is -242,635 contracts, driven by FII shorting in both calls and puts. High open interest in calls (4,319,073 contracts) and puts (3,965,178 contracts) suggests significant hedging or speculative activity.

Strike Levels: High OI in at-the-money (ATM) and out-of-the-money (OTM) strikes (25,000–25,500 calls and 24,500–25,000 puts) indicates strong support around 24,800–25,000 and resistance at 25,500–25,700.

2.4 Global Indices

US Markets: The NASDAQ Composite (20,611.34, +0.46%), Dow Jones (44,458.3, +0.20%), and S&P 500 (6,263.26, +0.12%) showed modest gains on July 9, reflecting stable global sentiment. However, the Nifty 50’s correlation with US indices has weakened recently, suggesting domestic factors dominate.

2.5 FPI Investments

Equity Flows: FIIs recorded a net equity outflow of ₹173.63 crore on July 16, consistent with their bearish futures and options positions. Debt investments showed a net inflow of ₹1,432.84 crore, indicating a preference for fixed-income securities.

Derivatives Activity: FIIs sold 13,428 index futures contracts and 9,110,628 index options contracts, reinforcing their bearish outlook.

3. Critical Levels

Based on OI and price data, the following levels are critical for the Nifty 50:

Support:

24,800–25,000: High put OI and recent price consolidation suggest strong support. A break below 24,800 could trigger selling toward 24,500.

24,500: Significant put OI and historical support from early June.

Resistance:

25,500–25,700: High call OI and historical resistance from late June (25,637.8 on June 27).

26,000: Psychological and technical resistance with low OI buildup.

4. Probable Movement

Bearish Bias: FIIs’ aggressive shorting in futures and options, coupled with net equity outflows, suggests a bearish outlook. The cumulative net futures position (-84,028) and options position (-242,635) indicate sustained selling pressure.

Consolidation Likely: The Nifty 50’s recent price action (25,195.8 to 25,212.05) and DII buying provide a buffer against sharp declines. The index is likely to consolidate between 24,800 and 25,500 in the near term.

Breakout Triggers:

Bullish Case: A breakout above 25,500 with increased DII buying and FII short covering could push the index toward 25,700–26,000.

Bearish Case: A break below 24,800, driven by FII selling and global risk-off sentiment, could lead to a decline toward 24,500 or lower.

Volatility: High OI in both calls and puts suggests elevated volatility, particularly around ATM strikes. The expiry of July contracts could amplify price swings.

5. Conclusion

The Nifty 50 is poised for consolidation between 24,800 and 25,500, with a bearish bias due to FII shorting. Support at 24,800–25,000 is robust, backed by put OI and DII buying, while resistance at 25,500–25,700 remains formidable. Traders should monitor FII activity, global cues, and domestic macroeconomic data (e.g., inflation, RBI policy) for breakout signals. Risk management is crucial given the high OI and potential for volatility.

6. Recommendations

Traders: Adopt a range-bound strategy, buying near 24,800 with a stop-loss below 24,700 and selling near 25,500 with a stop-loss above 25,700.

Investors: Await a clear breakout above 25,700 or below 24,800 before taking directional positions.

Data Monitoring: Track FII/DII flows, US market trends, and upcoming economic releases for directional cues.

7. Limitations

This analysis relies on OI and price data as of July 16, 2025, and may not account for intraday shifts or external events (e.g., geopolitical risks, policy changes). Global correlations and sudden FII position unwinding could alter the outlook.

References

National Stock Exchange (NSE) Open Interest Data, July 16, 2025.

FPI Investment Trends, NSE, July 16, 2025.

Historical Nifty 50 and global index data.

Anish Jagdish Parashar 

Indirect tax india research 

Disclaimer Content reflects personal views of the author; for trading and investment purposes consult your financial advisor.