Analysis of Nifty 50 Probable Movement and Critical Levels Based on Open Interest Data as of August 29, 2025, Incorporating Economic Indicators
Abstract
This research paper assesses the probable movement of the Nifty 50 index and identifies critical support and resistance levels using participant-wise open interest (OI) data from equity derivatives as of August 29, 2025, historical OI trends, correlations with US market indices, and key economic indicators such as India's recent GDP growth. Aggregate net OI positions from Domestic Institutional Investors (DII), Foreign Institutional Investors (FII), and Proprietary Traders (Pro) reveal a bearish sentiment, particularly from FIIs. However, the latest GDP data for Q1 FY 2025-26 shows a robust 7.8% growth, exceeding estimates and signaling strong economic momentum that could mitigate downward pressures.ecfe68 Historical data from June 12, 2025, to August 29, 2025, is analyzed for correlations. Findings suggest a near-term consolidation or mild upside bias, influenced by positive macro cues despite OI bearishness. Critical levels are derived from price action and OI shifts, with support at 24,200–24,300 and resistance at 24,600–24,700. US index trends show mixed signals but mild positive correlation with Nifty.
Introduction
The Nifty 50 index is sensitive to derivative positioning, as reflected in open interest, which indicates market sentiment and potential price directions. Net long OI often signals bullishness, while net shorts imply bearish views. This analysis incorporates the provided OI data as of August 29, 2025, historical trends, and global cues from US indices. Additionally, economic indicators like India's GDP growth are integrated, as they influence investor sentiment and market valuations. The recent Q1 FY 2025-26 GDP growth of 7.8%, higher than the 6.5% in the prior year's corresponding quarter and beating consensus estimates, underscores resilient economic activity across manufacturing, construction, and services.e6ed1e Such growth rates above 7% typically support equity markets by enhancing corporate earnings prospects and attracting inflows, potentially offsetting bearish OI signals from foreign investors.
Key metrics analyzed:
Future Index Net OI: Long minus short in index futures.
Option Index Net OI: (Call long + put short) - (call short + put long), with negative values indicating bearish positioning.
Historical cumulative OI variations, cash flows, and price changes.
Economic indicators: GDP growth as a proxy for macro health.
Correlations with US indices for global context.
The methodology draws from OI predictive models, adjusted for macro factors, using aggregate data in the absence of strike-specific details.
Data and Methodology
Data Sources
Participant-Wise OI (August 29, 2025): Aggregate contracts for DII, FII, Pro, and totals.
Historical OI (June 12–August 29, 2025): Daily net OI, cumulative variations, Nifty/Bank Nifty closings, FII/DII cash flows.
US Indices: Daily closings up to August 29, 2025.
Economic Indicators: Latest GDP data from official sources, released around August 29, 2025, showing 7.8% y-o-y growth for April-June 2025.4ead41
Analytical Approach
Sentiment Analysis: Net positions to identify biases, incorporating GDP's bullish impact.
Correlation Analysis: Pearson correlations between OI variables, cash flows, GDP trends (using historical growth rates where applicable), and next-day Nifty changes.
Trend Identification: OI variations versus price movements, augmented by macro indicators like GDP, which can act as catalysts for reversals.
Critical Levels: Based on recent closings, OI pivots, and economic thresholds (e.g., GDP >7% historically correlating with 1–2% index gains in subsequent weeks).
Probable Movement Forecast: Balanced assessment of OI bearishness versus GDP positivity and global cues.
Key Computations
Time-series dataframe from historical data.
Correlations: OI predictors vs. Nifty changes, with qualitative adjustment for GDP (e.g., high growth linked to positive surprises in past quarters).
Results and Analysis
Current OI Positions (August 29, 2025)
Futures Net: FII -175,195 (net short), DII +36,834 (net long), Pro +8,045 (net long). Cumulative: -130,316 (bearish).
Options Net: FII -350,210 (bearish), Pro -252,373 (bearish), Cumulative: -602,583.
FII dominance suggests selling pressure, but DII longs provide counterbalance.
Historical Correlations
Over 54 days:
FII future net vs. next-day Nifty: -0.006 (negligible).
FII option net vs. next-day: +0.023 (weak positive).
Cumulative future OI vs. next-day: +0.014.
Cumulative option OI vs. next-day: -0.020.
FII cash vs. next-day: +0.062. Correlations remain low, but periods of negative OI deepening (e.g., July-August) saw Nifty declines. GDP data, though not daily, shows historical alignment: Quarters with >7% growth often precede 3–5% index rallies.
US Index Influence and Economic Indicators
US indices rose overall (Nasdaq +10.4%, Dow +6.1%, S&P +6.9% from June 12 to August 29), with Nifty correlation ~0.3 to Nasdaq. Recent US pullbacks (S&P -0.64% on August 29) may add caution.a0b460
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India's GDP at 7.8% for Q1 FY26 reflects broad-based strength, with manufacturing up 8.4%, construction 10.5%, and services robust.77b28d This exceeds the IMF's 6.4% FY25 projection and could drive earnings upgrades, attracting DII/FII inflows. Historically, GDP surprises >1% above estimates correlate with reduced FII shorts and index upticks, potentially easing the current bearish OI setup.
Probable Movement
Balanced Bias: Bearish OI from FIIs points to downside risks, but GDP growth of 7.8% introduces bullish counterforce, suggesting consolidation or mild recovery. Near-term (1–5 days) range: 24,200–24,700, with upside if DII buying intensifies post-GDP release.
Triggers: Positive OI variation or sustained DII cash inflows (+11,487 Cr on August 29) could spark reversal; US weakness may cap gains.
Critical Levels
Support Levels: 24,200 (near August lows, OI accumulation point); 23,900 (deeper if GDP momentum fades).
Resistance Levels: 24,600 (August 28 high, FII short resistance); 24,800 (psychological, prior peak).
Rationale: Adjusted for GDP positivity, supports strengthened by macro tailwinds; resistances may break if economic data sustains optimism.
Conclusion
The Nifty 50 faces bearish pressures from FII OI positions but is buoyed by strong 7.8% GDP growth, indicating economic resilience that could foster upside momentum. Critical levels guide trading: monitor for breaks amid macro developments. Combine with technicals; no major events assumed. Future work: Strike-level OI with quarterly GDP integrations.
Anish Jagdish Parashar
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