Nifty 50 Probable Movement and Critical Levels (Based on Open Interest Data as of August 6, 2025)
This paper analyzes the probable movement of the Nifty 50 index based on open interest (OI) data, futures and options activity, and FII/DII investment trends as of August 6, 2025. By examining participant-wise open interest, daily variations, and global market influences, we identify critical support and resistance levels and forecast short-term price movements.
1.The Nifty 50, a benchmark index of the National Stock Exchange (NSE) of India, reflects the performance of the top 50 companies by market capitalization. Open interest data, futures and options positioning, and institutional investment flows provide critical insights into market sentiment and potential price direction. This analysis leverages the provided dataset to assess the Nifty 50’s probable movement and key technical levels.
2. Data Analysis
2.1 Open Interest in Futures and Options
The participant-wise open interest data as of August 6, 2025, reveals:
FIIs (Foreign Institutional Investors): Net short in futures index (-167,091 contracts) and options index (-314,850 contracts), indicating a bearish stance. Their gross purchases in equity (₹15,786.36 crore) and net investment (₹1,561.31 crore) suggest selective buying but cautious positioning in derivatives.
DIIs (Domestic Institutional Investors): Net long in futures index (+33,843 contracts), reflecting a bullish outlook, though their exposure in options is minimal.
Proprietary Traders (Pro): Net long in futures (+18,374 contracts) but net short in options (-247,580 contracts), indicating mixed sentiment with hedging in options.
The cumulative option index net OI (-562,430 contracts) suggests a bearish bias in the options market, driven by high put writing, particularly by proprietary traders and FIIs.
2.2 Daily Index Variations
Futures Index: FIIs reduced short positions (-128,808 contracts on August 6 vs. -134,007 on August 5), while DIIs increased long positions (24,574 contracts). This suggests unwinding of bearish bets by FIIs and accumulation by DIIs.
Options Index: Daily variations show significant put writing (e.g., -4999 contracts on August 6), reinforcing bearish sentiment at lower strike prices. However, call writing has been moderate, indicating limited resistance to upward moves.
2.3 Nifty 50 Price Movement
The Nifty 50 closed at 24,574.2 on August 6, 2025, down from 24,649.55 on August 5, reflecting a 0.31% decline.
Recent price action shows a consolidation range between 24,500 and 25,200, with a downward bias as global indices (Nasdaq, Dow Jones, S&P 500) also experienced corrections.
2.4 Global Market Context
Nasdaq Composite: Declined to 20,650.13 on August 1, 2025, reflecting tech sector weakness.
Dow Jones: Fell to 43,588.58 on August 1, indicating broader market caution.
S&P 500: Dropped to 6,238.01, aligning with global risk-off sentiment. These declines correlate with FIIs’ bearish positioning in Nifty futures and options, suggesting global cues are influencing Indian markets.
3. Technical Analysis and Critical Levels
3.1 Support Levels
Based on OI data and price action:
24,500: Significant put OI accumulation indicates strong support. A break below could trigger further selling toward 24,200.
24,200–24,300: Secondary support zone, supported by historical price consolidation and DII buying interest.
24,000: Psychological and technical support, likely to attract buying if tested.
3.2 Resistance Levels
24,800: High call OI and recent price rejection suggest resistance. FII short positions in futures may cap upside here.
25,000: Major psychological resistance, reinforced by call writing and FII selling pressure.
25,200: Upper boundary of the consolidation range, with heavy call OI indicating strong resistance.
3.3 Option Chain Analysis
Put OI Concentration: Highest at 24,500 and 24,000 strikes, suggesting strong demand for downside protection.
Call OI Concentration: Significant at 24,800 and 25,000, indicating selling pressure at these levels.
Put-Call Ratio (PCR): Likely below 1 (based on net OI data), signaling bearish sentiment in the options market.
4. Probable Movement
4.1 Short-Term Outlook (1–5 Days)
The Nifty 50 is likely to remain range-bound between 24,500 (support) and 24,800 (resistance) due to:
Bearish FII Positioning: FIIs’ net short positions in futures and options suggest limited upside potential unless global markets recover.
DII Support: DII buying in futures provides a cushion against sharp declines, supporting the 24,500 level.
Global Cues: Weakness in US indices (Nasdaq, Dow, S&P 500) may continue to pressure Indian markets, limiting bullish momentum.
A break below 24,500 could lead to a test of 24,200 or 24,000, while a move above 24,800 may face resistance at 25,000.
4.2 Key Triggers
FII Activity: A shift from net selling to buying in futures could signal a bullish reversal.
Global Market Recovery: A rebound in US indices may ease selling pressure on the Nifty 50.
RBI Policy or Economic Data: Domestic cues, such as RBI’s monetary policy or inflation data, could influence DII and retail sentiment.
5. Recommendations
Traders:
Bullish Strategy: Buy on dips near 24,500 with a stop-loss below 24,400, targeting 24,800.
Bearish Strategy: Sell rallies near 24,800 with a stop-loss above 24,900, targeting 24,500 or 24,200.
Options Strategy: Consider a bear put spread (buy 24,500 put, sell 24,000 put) to capitalize on potential downside while limiting risk.
Investors: Accumulate quality stocks on declines near 24,200–24,500, as DII buying supports long-term stability.
6. Conclusion
The Nifty 50 is poised for consolidation between 24,500 and 24,800 in the short term, with a bearish bias driven by FII selling and global market weakness. Critical support at 24,500 and resistance at 24,800 will define the near-term range. Traders should monitor FII flows, global indices, and domestic economic triggers for directional cues.
Anish Jagdish Parashar
Indirect tax online research
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