📘 NIFTY 50 – December Expiry
Market Sentiment & Derivatives Structure Research Note
Focus: Futures • Options • Institutional Positioning
1. NIFTY 50 remains in a balance-to-distribution phase ahead of the December expiry. Despite intermittent price recoveries, the index has failed to attract sustained long participation. Persistent FII futures short positions, combined with dominant call-side option supply, indicate that recent rallies are corrective and inventory-driven, rather than trend-defining.
Unless a decisive futures short-covering is observed, upside attempts are likely to face supply and time decay pressure.
2. Key Levels – December Expiry
Zone Type Level Range Market Interpretation
Major Resistance 26,600 – 26,950 Extreme supply zone, aggressive call writing
Primary Resistance 26,200 – 26,350 Sell-on-rise area, upside capped
Value / POC 25,950 – 26,050 Fair value acceptance, balance zone
Immediate Support 25,700 – 25,550 Fragile, DII-led defensive buying
Major Support 25,000 – 24,950 Structural demand, acceleration risk below
3. Price Acceptance & Market Structure
The index is trading near its volume Point of Control (POC) around 25,950–26,050. Multiple overlapping daily candles confirm auction balance, not directional expansion. Such structures typically resolve through forced positioning adjustments rather than organic trend formation.
4. Momentum & RSI Regime
Momentum indicators remain subdued. MACD histogram readings are negative, while RSI is capped in the 40–60 range, a classic bear-market RSI regime. This configuration historically aligns with range-bound markets carrying a downside skew.
5. Futures Positioning – December Expiry
FII index futures positioning remains net short on a cumulative basis, with no meaningful unwind during recent up-moves. The absence of open interest contraction on green candles confirms the lack of bullish conviction. DII participation remains defensive, while proprietary desks appear engaged in range and volatility strategies.
6. Options Market Control
Options data continues to reflect:
Heavy call writing above 26,200, effectively capping upside
Selective put writing near 25,500, indicating fragile downside protection
Net cumulative option positioning suggests that option writers continue to control price discovery into expiry.
7. Forward Scenarios
Base Case:
Range-bound movement between 25,700 and 26,300 with a sell-on-rise bias.
Bearish Extension:
A daily close below 25,550 with open interest addition opens downside targets toward 25,200 and 24,950.
Bullish Invalidation:
Sustained trade above 26,450, accompanied by futures OI contraction, would invalidate the bearish bias.
8. Conclusion
December expiry dynamics favor disciplined short-biased and income-generating strategies. Until derivatives positioning shifts materially, directional bullish exposure carries unfavorable risk–reward. Market participants should continue to align positioning with structural supply zones and monitor futures open interest behavior closely.
Disclaimer:
This document is published for educational and informational purposes only. It does not constitute investment advice or a solicitation to trade securities.
Anish Jagdish Parashar
Indirect tax india online research
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