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1️⃣ Structural OI Trend: Persistent Institutional Bearish Bias
Futures OI (Index):
FIIs: Consistently net short throughout the period. Latest –150,416 contracts, worsening from early December.
DIIs: Steadily net long (₹43,137 on 12 Dec), absorbing supply.
PROs: Marginally long but not aggressive.
🔍 Inference:
This is a classic FII short dominance regime, with DIIs acting as stabilizers rather than trend drivers. The cumulative futures OI remains deeply negative (–99,276), confirming that shorts are not being covered, only reshuffled.
📌 Sentiment: Bearish to Range-Bound Bearish
2️⃣ Options OI: Defensive Hedging, Not Risk Appetite
Options OI Snapshot (12 Dec):
FII Option OI: –232,360
PRO Option OI: –87,096
Cumulative Option OI: –319,456
Despite a positive daily option variation (+68,507), the structural option positioning remains heavily net short, suggesting:
Writing of calls at higher levels
Put unwinding rather than aggressive put buying
🔍 Inference:
This reflects volatility suppression and capped upside, not bullish conviction.
📌 Sentiment: Sell-on-Rise | Hedged Bearish
3️⃣ Cash Market Flows: DIIs Absorb, FIIs Distribute
12 Dec Cash Flows:
FII Cash: –₹1,114 Cr
DII Cash: +₹3,868 Cr
FIIs continue systematic distribution, while DIIs provide liquidity support, preventing sharp breakdowns.
🔍 Inference:
This flow structure typically results in grinding markets, not trending rallies.
📌 Sentiment: Distribution Phase
4️⃣ Index Behavior: Narrow Range, No Follow-Through
Index Level (12 Dec) Trend
Nifty 50 26,046 Sideways with downside pressure
Bank Nifty 59,389 Underperforming, heavy call writing
Repeated failure to sustain above 26,100–26,200 in Nifty and 59,800+ in Bank Nifty confirms:
Upside supply from FII call writers
Lack of short covering
📌 Sentiment: Range-Bound with Bearish Bias
5️⃣ Multi-Day OI Structure: What the Data Is Clearly Saying
Key Observations Across the Period:
No meaningful short covering by FIIs even on green days
Options OI contraction followed by re-shorting
PROs not leading directional moves
DIIs alone cannot reverse trend without FII support
🔍 This is not accumulation. This is controlled distribution.
6️⃣ Tactical Market Outlook (Next 1–3 Sessions)
🔻 Bias
Primary: Bearish to Neutral
Secondary: Intraday pullbacks likely to be sold
📍 Key Levels – Nifty 50
Resistance: 26,100 – 26,250
Support: 25,850 → 25,700
Breakdown below 25,700 may invite fast unwinding
📍 Bank Nifty
Resistance: 59,800 – 60,100
Support: 58,900 → 58,400
7️⃣ Strategy Framework (OI-Driven)
Positional Traders:
➤ Prefer bear call spreads / call writing near resistance
Intraday Traders:
➤ Sell rallies into OI-defined resistance
Avoid:
➤ Aggressive long carry trades until FII futures shorts reduce materially
🧭 Final Verdict
> Market Sentiment:
Cautious | Institutionally Bearish | Range-Bound with Downside Risk
As long as FII futures OI remains deeply net short and cash outflows persist, rallies are statistically lower-probability events.
Anish Jagdish Parashar
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Disclaimer: Content reflects personal views of the author and for trading and investment purposes consult with your financial advisor.
