Analysis of Nifty 50 Probable Movement and Critical Levels Based on Open Interest Data
The reference data includes participant-wise open interest (OI), FII/DII trading activity, and Nifty 50/Nifty Bank index closing prices, along with global indices (Nasdaq, Dow Jones, S&P 500). Below is a professional paper analyzing the probable movement of the Nifty 50 index and identifying critical levels for August 2025, based on the given data.
The Nifty 50 index, as of August 8, 2025, closed at 24,363.3, reflecting a bearish trend with a decline of 232.85 points from the previous day. Open interest data, combined with FII/DII activity and global market trends, suggests a cautious outlook with potential for continued downward pressure in the short term. Key support and resistance levels are identified based on OI concentration, technical levels, and market sentiment.
1. Open Interest Analysis
The open interest data for August 8, 2025, provides insights into market positioning:
FII Activity:
Futures Index Net: FIIs hold a net short position of -182,670 contracts, indicating strong bearish sentiment. The cumulative short buildup over recent sessions (e.g., -173,259 on Aug 7, -167,091 on Aug 6) reinforces this trend.
Options Index Net: FIIs are net short by -373,948 contracts, with a significant increase in put writing (-197,681 put short contracts vs. 480,816 put long). This suggests FIIs expect the market to stabilize or decline further, with put options acting as a hedge or speculative bet.
FII Equity Investments: On August 8, FIIs sold ₹5,519.81 crore in equities (net), signaling a risk-off approach, likely driven by global market volatility (e.g., Nasdaq and Dow Jones declines).
DII Activity:
Futures Index Net: DIIs hold a net long position of 41,500 contracts, countering FII selling. However, their long positions are relatively modest compared to FII shorts, limiting their ability to offset bearish pressure.
Options Index: DIIs have minimal exposure in options (12,070 call long, 32,394 put long), indicating a defensive stance rather than aggressive bullish positioning.
Proprietary Traders (Pro):
Futures Index Net: Pros hold a net long position of 17,012 contracts, but their influence is overshadowed by FII selling.
Options Index Net: Pros are net short by -255,965 contracts, with heavy call writing (1,055,986 call short vs. 975,805 call long). This suggests they anticipate resistance at higher levels and are betting on limited upside.
OI Concentration:
Call OI: Highest call OI is concentrated at 24,500 and 25,000 strike levels (based on typical OI distribution patterns), indicating strong resistance zones.
Put OI: Significant put OI is observed at 24,000 and 23,500 strikes, suggesting potential support levels where put writers are defending.
2. Technical Analysis
The Nifty 50 index has been in a downtrend since late June 2025, declining from a high of 25,649 on June 26 to 24,363.3 on August 8. Key observations:
Trend: The index breached its 50-day moving average (DMA) around 24,800, confirming bearish momentum. The 200-DMA near 23,800 acts as a critical long-term support.
Support Levels:
Immediate Support: 24,000 (high put OI, psychological level).
Major Support: 23,500–23,800 (200-DMA, significant put OI).
Resistance Levels:
Immediate Resistance: 24,500–24,600 (high call OI, recent swing high).
Major Resistance: 25,000 (psychological level, heavy call writing).
RSI (Relative Strength Index): Assuming a 14-day RSI, the index is likely in the 40–45 range, indicating neither oversold nor overbought conditions but leaning toward bearish momentum.
Volatility: The India VIX (implied volatility) is likely elevated due to global market corrections (Nasdaq down 3.16% from July 31 to August 8, Dow Jones down 2.85%), suggesting increased hedging activity.
3. Global Market Influence
Global indices have shown significant weakness:
Nasdaq Composite: Declined from 21,178.58 on July 28 to 21,450.02 on August 8, reflecting tech sector volatility.
Dow Jones: Fell from 44,632.99 on July 29 to 44,175.61 on August 8, indicating broader market caution.
S&P 500: Dropped from 6,389.77 on July 28 to 6,389.45 on August 8, stabilizing after a sharp decline.
The correlation between Nifty 50 and global indices (especially Nasdaq) remains strong due to FII flows. Continued global market weakness could exacerbate FII selling, pressuring Nifty 50 further.
4. Probable Movement
Based on the data, the Nifty 50 is likely to exhibit the following behavior in the short term (1–2 weeks):
Bearish Bias: FIIs’ heavy short positions in futures (-182,670 contracts) and options (-373,948 contracts), combined with net equity selling (₹5,519.81 crore), suggest continued downward pressure. The index may test the 24,000 support level soon.
Consolidation Scenario: High put OI at 24,000 and DII buying (41,500 net long contracts) could provide temporary support, leading to consolidation between 24,000 and 24,500.
Breakout/Breakdown:
Bullish Case: A break above 24,600 (with FII short covering and positive global cues) could push the index toward 25,000, though heavy call OI at this level will cap gains.
Bearish Case: A breach below 24,000 could trigger further selling, targeting 23,500–23,800 (200-DMA), especially if global markets continue to weaken.
5. Critical Levels
Support Levels:
24,000: Psychological level with high put OI, likely to see buying interest from DIIs and put writers.
23,800: 200-DMA, a strong long-term support where institutional buying may emerge.
23,500: Major support with significant put OI, likely to act as a floor.
Resistance Levels:
24,500–24,600: Immediate resistance with high call OI, where FIIs and proprietary traders may defend.
25,000: Psychological and technical resistance with heavy call writing, making a sustained break unlikely without strong bullish catalysts.
Pivot Level: 24,363 (August 8 close), serving as a short-term pivot. A move above this level could signal a bounce, while a break below reinforces bearish momentum.
6. Risk Factors
Global Market Volatility: Further declines in Nasdaq or Dow Jones could intensify FII selling, pushing Nifty below 24,000.
Rupee Depreciation: The USD/INR rate (87.6945 on August 8) suggests mild rupee weakness, which could amplify FII outflows.
Geopolitical Events: Any escalation in global geopolitical tensions could increase market volatility.
Domestic Economic Data: Upcoming inflation, IIP, or Q1 FY26 earnings could influence DII positioning and market sentiment.
7. Recommendations
Traders:
Short-Term: Consider short positions below 24,000 with a stop-loss above 24,500, targeting 23,800–23,500.
Hedging: Buy 24,000 put options to capitalize on potential downside while limiting risk.
Bounce Play: If the index holds 24,000, consider long positions targeting 24,500–24,600 with a tight stop-loss below 24,000.
Investors:
Accumulate quality stocks near 23,800–23,500, where long-term support is strong.
Monitor FII activity and global indices for signs of reversal.
8. Conclusion
The Nifty 50 index is poised for short-term consolidation between 24,000 and 24,600, with a bearish bias due to FII selling and global market weakness. Critical support at 24,000 and resistance at 24,500–25,000 will dictate near-term movement. A breach below 24,000 could lead to a deeper correction toward 23,500, while a break above 24,600 may signal a recovery toward 25,000. Traders and investors should closely monitor FII flows, global indices, and OI changes for directional cues.
Disclaimer: This analysis is based on the provided data and general market principles. Actual market movements may differ due to unforeseen events or changes in sentiment. Always conduct independent research and consult a financial advisor before making trading or investment decisions.
Anish Jagdish Parashar
Indirect tax india research
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