1️⃣ What changed on 22-12-25 (key inflection) oi
🔹 Futures positioning
FII index futures: still net short –144,701
➝ structural bearish bias unchanged
DII futures: +44,693 (steady support)
PRO futures: +11,828 (tactical long)
👉 Cumulative futures OI improved to –88,180
(from –96,899 → –105,674 earlier)
📌 Interpretation:
This is short covering, not fresh bullish buildup.
🔹 Options positioning (this is the big tell)
FII option OI: –1,42,539 (still net writer / defensive)
PRO option OI: +59,258
Cumulative option OI: improved sharply to –83,281
from –2.79 lakh → –83k in 3 sessions
📌 Interpretation:
➡️ Aggressive option short covering
➡️ Upside pressure released (call writers easing hedges)
This aligns perfectly with +195,754 daily option variation.
🔹 Cash market
FII cash: –457 Cr (still selling)
DII cash: +4,058 Cr (absorbing supply)
📌 Interpretation:
Rally is derivative-led, not cash-led → hence controlled / grind up, not runaway.
2️⃣ Reading the attached chart (very important)
🔹 Price + Volume Profile (VPVR)
Major HVN: 25,950 – 26,050 → acceptance zone
Current price: 26,172
Price has broken above value area high, now retesting from above
📌 Bias: Bullish as long as value area is defended.
🔹 Moving averages
Price is above short & medium MAs
Rising structure intact → trend supportive
🔹 Momentum (MACD + RSI)
MACD: Histogram contracting → bearish momentum exhausted
RSI ~58–59: healthy bullish zone, no divergence
📌 This is not an overbought rally.
3️⃣ Market structure summary (very clear)
FII Futures
still short (cap on runaway upside)
Option OI
Massive short covering (bullish impulse)
Cash
DII-supported, FII light selling
Chart
Acceptance above value, higher lows
Momentum
Positive, not stretched
4️⃣ Market sentiment (net conclusion)
🔵 Sentiment: “Cautiously Bullish / Short-covering driven”
This is NOT:
fresh long buildup
trend reversal confirmation
This IS:
relief rally
hedge unwinding
positional short squeeze within a broader range
5️⃣ Levels that matter now (from OI + VPVR)
🔹 Supports
26,050 – 26,000 → strongest base (value area)
25,900 → breakdown risk only below this
🔹 Resistances
26,300 – 26,350 → first call-writing zone likely
26,500+ → only if FII futures shorts start covering materially
6️⃣ Tactical view for next 1–2 sessions
📈 If market holds above 26,050
Buy on dips
Expect slow grind towards 26,300–26,350
📉 If market fails below 26,000
Rally classified as pure short-covering exhaustion
Expect retracement to 25,850 – 25,800
7️⃣ One-line professional takeaway
“Nifty’s breakout is driven by aggressive option short covering amid persistent FII futures shorts. Price acceptance above the value area keeps the near-term bias positive, though the absence of fresh long buildup suggests a controlled upside rather than a trend reversal.”
Anish Jagdish Parashar
Indirect tax india online research
Disclaimer: Content reflects personal views of the author; for trading and investment purposes consult with your financial advisor.
