Nifty 50: Probable Movement

 

Nifty 50: Probable Movement and Critical Levels (as of July 22, 2025)

1. Market Context and Price Action

Nifty 50 Closing Price (July 22, 2025): 25,060.9

Recent Trend: The Nifty 50 has shown volatility, declining from a high of 25,637.8 on June 27, 2025, to 25,060.9 on July 22, 2025, a drop of approximately 2.25% over the period. The index has been consolidating between 24,700 and 25,600, with intermittent pullbacks.

Global Indices:

NASDAQ Composite: Declined from 20,973.46 (June 27) to 20,892.69 (July 22), signaling caution in global tech-heavy markets.

Dow Jones: Increased from 42,206.82 (June 20) to 44,502.44 (July 22), indicating resilience in broader U.S. markets.

S&P 500: Rose from 5,967.84 (June 20) to 6,305.6 (July 21), reflecting bullish sentiment in U.S. equities.

The mixed global cues suggest selective sector strength, with Indian markets potentially influenced by U.S. market resilience but cautious due to tech sector weakness.

2. Open Interest Analysis

a. Futures Open Interest (Participant-Wise, July 22, 2025)

FIIs: Net short with -149,454 contracts (Future Index Long: 30,254; Short: 179,708). This indicates strong bearish positioning by FIIs, likely hedging or anticipating a correction.

DIIs: Net long with 36,280 contracts (Long: 65,840; Short: 29,560). DIIs are countering FII selling, providing support to the market.

Proprietary Traders (Pro): Net long with 15,229 contracts (Long: 43,873; Short: 28,644), aligning with DIIs but with less conviction.

Cumulative FII Futures Trend (July 1–22): FIIs have consistently increased short positions, with net futures OI moving from -38,123 (June 30) to -149,454 (July 22), reflecting growing bearish sentiment.

b. Options Open Interest (July 22, 2025)

FIIs: Net short in options with -197,860 contracts (Call Long: 404,137; Put Long: 528,219; Call Short: 424,169; Put Short: 350,391). FIIs have a higher put long position, suggesting hedging against downside risk.

Pro Traders: Net short in options with -179,103 contracts (Call Long: 1,097,819; Put Long: 1,080,196; Call Short: 1,060,528; Put Short: 863,802). The balanced call/put OI indicates neutral-to-bearish positioning.

Option Index Net Cumulative: The cumulative option OI has shifted from +103,544 (June 30) to -376,963 (July 22), signaling a buildup of bearish sentiment in the options market.

Key Strike Levels (based on typical OI concentration):

Support (Put OI Concentration): Likely around 24,500–24,700, where significant put writing is expected, acting as a floor.

Resistance (Call OI Concentration): Likely around 25,300–25,500, where call writing is prominent, capping upside moves.

c. Daily Variations

FII Futures Variation (July 22): -2,124 contracts, indicating continued short buildup.

DII Futures Variation (July 22): -190,156 contracts, a sharp reduction in long positions, suggesting profit booking or reduced bullish conviction.

Options Variation (July 22): FIIs reduced option positions by -44,769 contracts, while Pros reduced by -145,387, indicating unwinding of positions, possibly due to expiry-related adjustments.

3. FII Investment Trends (July 22, 2025)

Equity Market (Stock Exchange): FIIs sold ₹12,852.97 crore and bought ₹11,761.69 crore, resulting in a net outflow of ₹1,091.28 crore (US$ -126.56 million). This aligns with the bearish futures and options positioning.

Debt and Hybrid Markets: Net outflows in debt (₹-77.1 crore) and hybrid (₹-27.42 crore) segments indicate a cautious approach across asset classes.

4. Technical Levels and Probable Movement

Based on the OI data, price action, and FII/DII activity, the following critical levels and probable movements are derived:

Support Levels:

24,700–24,800: Strong put OI concentration and historical support from mid-June levels (24,718.6 on June 13).

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

Resistance Levels:

25,300–25,400: Significant call OI buildup, likely to act as a near-term ceiling.

25,600: Recent high (June 27) and a major resistance zone.

Probable Movement:

Bearish Bias (Short-Term): The heavy FII short positions in futures (-149,454 contracts) and options (-197,860 contracts), coupled with net equity outflows, suggest downward pressure. The Nifty 50 may test 24,700–24,800 in the near term if selling intensifies.

Potential Rebound: DIIs’ net long futures position (36,280 contracts) and historical buying at lower levels (e.g., 24,718 on June 13) indicate potential support around 24,700, which could trigger a bounce toward 25,200–25,300 if global cues remain stable.

Volatility Outlook: The high cumulative option OI (-376,963) and unwinding of positions suggest elevated volatility, especially near expiry. The index is likely to consolidate between 24,700 and 25,300 until a clear breakout catalyst emerges.

5. Key Scenarios and Trading Strategy

Bearish Scenario (Break below 24,700):

Trigger: Increased FII selling and global market weakness (e.g., NASDAQ further declining below 20,800).

Target: 24,500 (next major support).

Strategy: Short futures or buy 24,700/24,500 puts with a stop-loss above 25,000.

Bullish Scenario (Break above 25,300):

Trigger: DII buying intensifies, FIIs cover shorts, or positive global cues (e.g., S&P 500 sustains above 6,300).

Target: 25,600–25,800.

Strategy: Buy 25,300/25,500 calls with a stop-loss below 24,900.

Neutral/Range-Bound Strategy:

Range: 24,700–25,300.

Strategy: Sell straddles/strangles at 25,000 or 25,200 strikes to capitalize on consolidation and time decay, with strict risk management.

6. Risk Factors

Global Markets: A sharp correction in U.S. indices (e.g., NASDAQ dropping below 20,500) could amplify FII selling.

FII Activity: Continued short buildup by FIIs could push the index toward 24,500.

Expiry Dynamics: High OI unwinding near expiry may lead to sharp intraday moves.

Macro Events: Monitor global macroeconomic data (e.g., U.S. Fed policy, India’s Q1 FY26 results) for directional cues.

7. Conclusion

The Nifty 50 is likely to remain range-bound between 24,700 and 25,300 in the near term, with a bearish tilt due to FII short positions and net equity outflows. Key support at 24,700 and resistance at 25,300 are critical levels to watch. Traders should adopt range-bound strategies while staying alert for breakout signals driven by FII/DII activity or global market trends.

Disclaimer: This analysis is based on the provided data and general market principles. Actual market movements may differ due to unforeseen events. Consult a financial advisor before making trading decisions.

Anish Jagdish Parashar 

Indirect tax india research