Analysis of Nifty 50 Probable Movement and Critical Levels as of August 20, 2025
Executive Summary
The Nifty 50 index closed at 25,050.55 on August 20, 2025, marking a gain of 69.90 points or 0.28%, extending its upward trajectory for the fifth consecutive session. This movement comes amid mixed signals from participant positions in equity derivatives, with Foreign Institutional Investors (FIIs) maintaining a bearish stance in index futures but showing bullish aggression in options. Domestic Institutional Investors (DIIs) continue to provide counterbalancing support through net buying in the cash segment. Open interest (OI) data suggests a range-bound outlook in the near term, with critical levels influenced by technical resistances, supports, and institutional flows. Based on the provided participant-wise OI data and historical trends, the probable movement leans cautiously bullish if the index sustains above 25,000, but risks a pullback if global cues weaken or FII shorting intensifies. Key critical levels include support at 24,800–24,850 and resistance at 25,150–25,200.
Current Participant Positions and Open Interest Overview
As per the provided data for August 20, 2025, the total open interest in equity derivatives stands balanced at 20,871,300 contracts for both long and short positions. Breaking it down by participant:
FIIs: Hold a net short position in index futures (-173,192 contracts) and a net bearish stance in index options (-249,219 contracts, interpreted as net calls minus net puts). This indicates sustained selling pressure, with FIIs adding shorts in futures recently (change of approximately -1,661 contracts from August 19).
DIIs: Net long in index futures (+32,204 contracts), acting as a stabilizing force, though their option exposure is minimal.
Proprietary Traders (Pros): Mildly net long in futures (+21,873 contracts) but net short in options (-56,097 contracts).
Historical analysis of the provided dataset (from May to August 2025) shows FII future net positions have been predominantly short, averaging around -176,337 contracts over the last five sessions. Changes in FII future net positions correlate weakly positively (correlation coefficient: 0.10) with daily Nifty price changes, suggesting that reductions in FII shorts (unwinding) often coincide with upward price movements. Similarly, FII option net changes show a correlation of 0.10 with price shifts, implying options hedging plays a secondary role in short-term momentum.
Complementing this, real-time market data reveals FIIs shorted 668 index future contracts on August 20, maintaining a long-to-short ratio of 0.10 (90% short), reinforcing bearish conviction. However, in options, FIIs added 16,400 long call contracts and shorted 11,100 put contracts, signaling confidence in an upside potential.892d3d DIIs countered with net buying of ₹2,261 crore in the cash market, while FIIs sold ₹634 crore.
OI additions in Nifty August futures reached 3.4 lakh contracts, with a rise in cost of carry indicating short covering. The options chain shows highest call OI at 24,600 and 24,700 strikes, and put OI at 24,500 and 24,400, implying an expected trading range of 24,400–24,700 in the near term.The put-call ratio (PCR) at 1.11 points to mild bullishness, though values between 0.90 and 1.05 typically signal consolidation. Maximum pain is at 25,000, where option writers face the least loss.
Historical Trends and Correlations
Over the analyzed period (May 22 to August 20, 2025), Nifty 50 prices fluctuated between approximately 24,363 (August 8 low) and 25,649 (August 5 high in the dataset), with recent sessions showing a rebound from 24,718.6 (August 19) to 24,888.2 (August 20). This aligns with broader market recovery, though the provided closes are slightly lower than actual market levels (e.g., actual August 20 close: 25,050.55).
Key observations:
When FIIs unwind shorts in futures (positive change in net), Nifty tends to rise, as seen from August 14 to 18 (FII future net improved by +11,555 contracts; Nifty up +93 points).
Option net improvements (less negative) correlate with minor upticks, e.g., August 19 to 20 (option net +33,903; Nifty up +170 points).
US indices (NASDAQ, Dow, S&P 500) show positive correlation with Nifty, with recent gains (e.g., NASDAQ up 255 points on August 20) supporting domestic sentiment.
The weak correlations (0.10) indicate that while institutional flows influence direction, external factors like global cues and policy expectations (e.g., GST rate hopes) play a significant role.
Probable Movement
The Nifty 50 is poised for a potential upward extension if it sustains above 25,000–25,012, targeting 25,091–25,200, driven by short covering and bullish option builds.820330 However, the rally appears fragile, reliant on speculative GST cut expectations and vulnerable to FII shorting if resistance holds.A failure to breach 25,012 could trigger a downward move towards the unfilled gap at 24,631–24,852.
Bullish Scenario: Sustained above 25,013; targets 25,091/25,055 (positional). Supported by DII buying and FII option bullishness.
Bearish Scenario: Below 24,934; targets 24,856/24,778. Triggered by FII future shorts and retail put loading.
Range-Bound Probability: High in the short term (PCR 1.11), with max pain at 25,000 favoring consolidation around current levels.
Given FIIs' dominant short positions in futures and the dataset's recent average net of -176,337, downside risks persist if US markets correct (e.g., NASDAQ at 19,662 showing volatility).
Critical Levels
Based on technicals, OI, and recent highs/lows:
Resistance Levels:
Immediate: 25,150–25,200 (key overhead zone; breach could accelerate bulls).02053e
Major: 25,012–25,025 (Gann resistance and 20 SMA).
Support Levels:
Immediate: 24,850–24,800 (short-term moving averages; breach may lead to 24,650).
Major: 24,631–24,852 (unfilled gap); 24,721 (trend change level).7fc725 Recent dataset low: 24,718 (August 19).
OI-Inferred Levels: Call wall at 24,700; put base at 24,500; expected range 24,400–24,700. Max pain at 25,000 acts as a magnet for expiry.
Trend change levels: Positional at 24,721; intraday at 25,005.
Conclusion
The Nifty 50 exhibits cautious optimism, closing above 25,000 amid bullish option flows and DII support, but FII future shorts pose a downside threat. Probable movement favors consolidation with upside bias if resistances break, but a reversal below 24,934 could target lower supports. Traders should monitor FII/DII flows, US indices, and policy developments for confirmation. This analysis integrates provided OI data with market correlations, suggesting vigilance around critical levels for risk management.
Anish Jagdish Parashar
Indirecttaxindiaonline research
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