Nifty 50 Probable Movement

 

Nifty 50 Probable Movement and Critical Levels Based on Open Interest Data (July 24, 2025)

This analysis leverages open interest (OI) data, futures and options positioning, and FII/DII activity to forecast the probable movement of the Nifty 50 index and identify critical support and resistance levels. The data provided includes participant-wise OI, daily FII/DII investments, and index closing prices as of July 24, 2025. The analysis indicates a bearish bias in the near term due to significant FII selling in futures and options, with key support and resistance levels identified based on OI concentration and price action.

1. Market Context and Data Overview

The Nifty 50 index closed at 25,062.1 on July 24, 2025, reflecting a decline of 157.8 points (-0.63%) from the previous day. The Nifty Bank index also fell, closing at 57,066.05 (-144.4 points, -0.25%). Global indices showed mixed performance, with the Nasdaq Composite declining to 21,057.96 (-0.18%) and the Dow Jones to 44,693.91 (-0.71%), while the S&P 500 remained relatively flat at 6,358.91 (+0.78% over recent sessions).

Key observations from the provided data:

FII Activity: FIIs have maintained a net bearish stance in index futures (net -145,538 contracts) and options (net -165,910 contracts) as of July 24, 2025. Their gross sales in equity markets (₹18,781.7 crore) significantly outpaced purchases (₹15,405.02 crore), resulting in a net outflow of ₹3,376.68 crore.

DII Activity: DIIs hold a net long position in index futures (+28,255 contracts), acting as a counterbalance to FII selling but with limited impact due to lower volumes.

Pro Activity: Proprietary traders (Pro) show a net long position in futures (+8,499 contracts) but a significant net short position in options (-174,524 contracts), suggesting a hedging strategy or bearish outlook.

Options OI: High OI concentrations in call and put options indicate key levels of support and resistance, with notable activity in the 24,500–25,500 strike range for calls and 24,000–24,500 for puts.

2. Technical and OI-Based Analysis

2.1 Open Interest Analysis

Index Futures:

FIIs’ consistent selling in futures (cumulative net -108,784 contracts as of July 24) reflects strong bearish sentiment. The daily variation shows FIIs reducing short positions slightly (-7,263 contracts), but the overall trend remains bearish.

DIIs’ net long position (+28,255 contracts) and marginal buying (+28,255 contracts) suggest they are absorbing FII selling, potentially stabilizing the market at lower levels.

Pro traders’ net long position (+8,499 contracts) indicates selective buying, possibly at perceived support levels.

Index Options:

High OI in call options at 25,000–25,500 strikes (FII call short OI: 310,417 contracts) suggests strong resistance in this zone. Significant put OI at 24,000–24,500 strikes (FII put long OI: 456,262 contracts) indicates potential support.

The put-call ratio (PCR) based on OI is approximately 0.89 (2,688,606 put contracts vs. 3,022,103 call contracts), signaling mild bearish sentiment as call writing dominates.

Pro traders’ heavy shorting in both calls (744,046 contracts) and puts (608,571 contracts) suggests a market-neutral or volatility-based strategy, likely profiting from range-bound movement.

2.2 Price Action and Trends

The Nifty 50 has been consolidating between 24,700 and 25,600 over the past month, with recent sessions showing increased selling pressure. The index’s failure to sustain above 25,200 (July 10–11, 2025) and the subsequent drop below 25,100 reinforce bearish momentum.

The Nifty Bank index, closely correlated with Nifty 50, shows similar consolidation between 55,500 and 57,500, with recent weakness indicating potential for further downside.

Global indices’ mixed performance (Nasdaq and Dow declining, S&P 500 stable) suggests cautious sentiment, with no strong bullish catalyst to support Indian indices in the near term.

3. Probable Movement

Based on the OI data, FII/DII activity, and price trends, the Nifty 50 is likely to exhibit the following behavior in the near term (1–2 weeks):

Bearish Bias: FIIs’ aggressive selling in futures and options, coupled with net equity outflows (₹3,722.53 crore total), suggests continued downward pressure. The high OI in 25,000–25,500 call strikes reinforces resistance, making a sustained breakout above 25,500 unlikely without significant positive triggers.

Range-Bound Consolidation: The high put OI at 24,000–24,500 strikes, combined with DII buying in futures, indicates strong support in this zone. A sharp decline below 24,500 is possible but may be met with buying interest from DIIs and retail investors.

Volatility Outlook: The heavy shorting by proprietary traders in both calls and puts suggests expectations of heightened volatility, potentially driven by global cues or domestic events (e.g., upcoming earnings or policy announcements).

3.1 Scenarios

Bearish Scenario (Probability: 60%):

If FII selling persists and global indices continue to weaken, the Nifty 50 could test support at 24,500–24,700. A break below 24,500 may trigger further downside toward 24,000, a psychologically significant level with high put OI.

Key trigger: Sustained FII outflows and negative global cues (e.g., Nasdaq/Dow falling below 20,500/44,000).

Bullish Scenario (Probability: 25%):

A reversal in FII positioning (e.g., short covering in futures or reduced call writing) or strong DII buying could push the index toward 25,500–25,600. A breakout above 25,600 would signal a bullish trend, potentially targeting 26,000.

Key trigger: Positive global cues (e.g., S&P 500 breaking above 6,400) or domestic policy support.

Neutral Scenario (Probability: 15%):

The index may consolidate between 24,700 and 25,300, with high OI at these levels acting as support and resistance. This scenario is likely if FII selling slows and DIIs continue to absorb supply.

Key trigger: Lack of significant catalysts in global or domestic markets.

4. Critical Levels

Based on OI concentration, price action, and historical support/resistance, the following levels are critical for the Nifty 50:

Support Levels:

24,700: Strong put OI and recent price consolidation make this a key support. DII buying is likely to intensify here.

24,500: Psychologically significant level with high put OI (456,262 FII put long contracts). A break below this could accelerate selling.

24,000: Major support with potential for strong buying interest from DIIs and retail investors.

Resistance Levels:

25,200: Immediate resistance, tested multiple times in July (e.g., July 10–11, 2025). High call OI (310,417 FII call short contracts) strengthens this barrier.

25,500: Strong resistance due to heavy call writing and recent price rejection (July 9–10, 2025).

25,600–25,800: Major resistance zone, with a breakout requiring significant FII short covering or positive global cues.

5. Recommendations

Traders:

Short-Term (Intraday/Swing): Consider bearish strategies (e.g., put buying or call writing) near 25,200–25,500, with strict stop-losses above 25,600. On the downside, look for buying opportunities near 24,700–24,500.

Options Strategy: A bear put spread (buy 24,700 put, sell 24,500 put) or a short straddle at 25,000 (for volatility-focused traders) could be effective given the high OI and expected range-bound movement.

Investors:

Monitor FII activity closely. Sustained selling may provide opportunities to accumulate quality stocks at lower levels (e.g., near 24,500).

Focus on defensive sectors (e.g., FMCG, Pharma) if bearish momentum persists, as these are less sensitive to FII outflows.

Risk Management:

Maintain strict stop-losses due to potential volatility from global cues or FII positioning changes.

Watch for sudden shifts in OI (e.g., FII short covering or DII selling) as early indicators of trend reversals.

6. Conclusion

The Nifty 50 is poised for a near-term bearish move, driven by FII selling in futures and options, with key support at 24,700–24,500 and resistance at 25,200–25,500. High OI in both calls and puts suggests a range-bound market with potential for increased volatility. Traders should focus on short-term opportunities near critical levels, while investors should await stabilization near support zones for accumulation. Monitoring FII/DII flows and global indices will be crucial for anticipating trend changes.

Disclaimer: This analysis is based on the provided data and general market principles. Actual market movements may vary due to unforeseen events or changes in participant behavior. Always conduct independent research and consult a financial advisor before making investment decisions.

Source: National Stock Exchange (NSE), participant-wise OI data, FII/DII investment trends as of July 24, 2025.

Anish Jagdish Parashar 

Indirect tax india research