Nifty 50 Probable Movement and Critical Levels

 

Nifty 50 Probable Movement and Critical Levels Based on Open Interest Data (as of July 23, 2025)

This analysis examines the probable movement of the Nifty 50 index based on open interest (OI) data, FII/DII activity, and global market trends as of July 23, 2025. The Nifty 50 closed at 25,219.9, reflecting a cautious market sentiment amid mixed signals from futures and options data, foreign institutional investor (FII) activity, and global indices (Nasdaq, Dow Jones, S&P 500). Key support and resistance levels are identified, and a short-term outlook is provided to guide traders and investors.

1. Open Interest Analysis

The provided OI data for futures and options, combined with FII/DII activity, offers critical insights into market positioning and sentiment.

1.1 Futures Open Interest

FIIs: Net short with -145,557 contracts in index futures (32171 long vs. 177728 short), indicating bearish sentiment. This is consistent with a cumulative net short position of -101,521 contracts as of July 23, 2025.

DIIs: Net long with 33,796 contracts, acting as a counterbalance to FII selling pressure. However, their long positions are significantly smaller than FII shorts, suggesting limited bullish conviction.

Proprietary Traders (Pro): Modestly net long with 10,240 contracts, indicating a neutral-to-bullish stance but with limited conviction.

Daily Variation: FIIs reduced their short positions by 3,576 contracts, while DIIs increased longs by 320,174 contracts, suggesting some short covering and fresh long buildup.

1.2 Options Open Interest

FIIs: Net short in index options with -119,347 contracts (418,425 call long, 540,459 put long vs. 402,265 call short, 404,952 put short). The higher put long positions suggest hedging or bearish bets.

Proprietary Traders: Net long with 62,558 contracts, driven by significant call long positions (1,100,090) and put long positions (1,279,789). This indicates speculative bullish positions but with hedging via puts.

Cumulative Option OI: The cumulative net OI in index options is -56,789, reflecting a bearish tilt in the options market.

Key Strike Levels:

Highest Call OI: Likely concentrated around 25,500–26,000, indicating strong resistance.

Highest Put OI: Likely around 25,000–24,500, suggesting strong support.

The put-call ratio (PCR) is not explicitly provided but can be inferred as slightly bearish due to higher put OI, signaling caution or downside protection.

1.3 Interpretation

FII Selling Pressure: FIIs’ consistent short positions in futures and options suggest a bearish outlook, possibly driven by global market cues or profit booking after the Nifty 50’s rally to 25,219.9.

DII Counterbalance: DIIs’ long positions provide some support, but their limited scale may not fully offset FII selling.

Options Hedging: The heavy put OI indicates market participants are bracing for potential downside, while call OI at higher strikes suggests capped upside in the near term.

2. Price Movement and Technical Levels

The Nifty 50 closed at 25,219.9 on July 23, 2025, up from 25,060.9 the previous day, reflecting a modest recovery. However, the index has been volatile, as evidenced by the range between 24,620 (June 4, 2025) and 25,637.8 (June 27, 2025).

2.1 Critical Support Levels

Immediate Support: 25,000–25,100

Supported by high put OI and recent price action, where the index bounced from 25,060.9 (July 22, 2025).

A break below 25,000 could trigger selling toward 24,800–24,700, aligning with the 50-day moving average (DMA) and higher put OI.

Strong Support: 24,500–24,600

This zone corresponds to the 100-DMA and significant put OI, acting as a major demand zone.

A breach below 24,500 could lead to a deeper correction toward 24,000, a psychological and technical support level.

2.2 Critical Resistance Levels

Immediate Resistance: 25,500–25,600

High call OI and the recent high of 25,637.8 (June 27, 2025) make this a formidable barrier.

A breakout above 25,600 would require strong FII buying or positive global cues.

Major Resistance: 26,000

A psychological level with likely heavy call OI, acting as a ceiling for bullish momentum in the near term.

2.3 Trend Analysis

The Nifty 50 is in a short-term consolidation phase, trading within a 24,500–25,600 range.

The 50-DMA (approx. 24,800) and 200-DMA (approx. 23,500, not tested recently) provide structural support.

Momentum indicators (e.g., RSI, not provided but inferred) are likely in the neutral zone (40–60), suggesting neither overbought nor oversold conditions.

3. FII/DII Investment Trends

FII Equity Investments (July 23, 2025):

Net investment: +4,618.07 crores (gross purchases: 21,686.24 crores; gross sales: 17,068.17 crores).

Positive net investment in the cash market contrasts with their bearish futures and options positions, suggesting selective buying in quality stocks or primary market activity.

DII Activity: Not explicitly detailed in cash market data, but their long futures positions indicate domestic support for the market.

Implications: FIIs’ cash market buying may stabilize the index, but their short positions in derivatives suggest caution or hedging against global uncertainties.

4. Global Market Context

Nasdaq Composite: Declined from 21,020.02 (July 22, 2025) to an unspecified level on July 23, 2025, indicating tech sector weakness.

Dow Jones: Rose from 44,502.44 (July 22, 2025) to 45,010.29 (July 23, 2025), reflecting resilience in blue-chip stocks.

S&P 500: Marginally up from 6,309.62 (July 22, 2025) to an unspecified level, suggesting mixed global sentiment.

Implications: The Nasdaq’s weakness may pressure IT-heavy Nifty 50 constituents, while Dow’s strength could support banking and industrial stocks. Global volatility (VIX not provided but assumed elevated) may cap Nifty’s upside.

5. Probable Movement and Scenarios

Based on the OI data, price action, and global cues, the Nifty 50’s short-term movement (next 1–2 weeks) can be outlined as follows:

5.1 Bullish Scenario

Trigger: Strong FII buying in cash markets continues, coupled with short covering in futures (FIIs reducing short OI).

Target: Breakout above 25,600, aiming for 26,000–26,200.

Catalysts: Positive global cues (e.g., US Fed rate cut signals, Nasdaq recovery) or robust domestic earnings.

Probability: Moderate (30%), given FIIs’ bearish derivative positions and global volatility.

5.2 Bearish Scenario

Trigger: FIIs increase short positions or global markets (Nasdaq, S&P 500) decline sharply.

Target: Fall toward 24,800–24,500, with a potential deeper correction to 24,000 if 24,500 breaks.

Catalysts: Global risk-off sentiment, rising US bond yields, or weak domestic earnings.

Probability: High (50%), due to FIIs’ net short positions and heavy put OI.

5.3 Sideways Scenario

Trigger: Lack of decisive FII/DII activity and mixed global cues.

Range: 24,800–25,600, with 25,000 acting as a pivot.

Catalysts: Absence of major macroeconomic or earnings triggers.

Probability: Moderate (20%), as the market awaits clearer directional cues.

6. Critical Levels and Trading Strategy

Support Zone: 25,000–24,800 (immediate), 24,500–24,600 (strong).

Resistance Zone: 25,500–25,600 (immediate), 26,000 (major).

Trading Strategy:

Long Setup: Buy near 25,000–24,800 with a stop-loss below 24,700, targeting 25,500–25,600.

Short Setup: Sell near 25,500–25,600 with a stop-loss above 25,700, targeting 25,000–24,800.

Options Strategy: Consider a bear put spread (buy 25,000 put, sell 24,500 put) for downside protection or a straddle at 25,000 for volatility plays.

7. Conclusion

The Nifty 50 is likely to remain range-bound between 24,800 and 25,600 in the near term, with a bearish bias due to FIIs’ net short positions in futures (-145,557 contracts) and options (-119,347 contracts). However, DII buying and selective FII cash market investments provide support. Critical levels to watch are 25,000 (support) and 25,600 (resistance). Traders should monitor FII activity, global market trends, and upcoming domestic earnings for directional cues.

8. Disclaimer

This analysis is based on the provided data and general market principles. It is for informational purposes only and does not constitute financial advice. Investors and traders should conduct their own research and consult financial advisors before making decisions.

Sources: NSE, Central Depository Services (India) Limited, provided dataset.

Anish Jagdish Parashar 

Indirect tax india research