Market Read (as of 02-01-2026)

Net Bias: Cautiously Bullish → Buy-on-dips, not chase

The market is transitioning from a persistent FII-led short regime into a short-covering + option-driven upside, but FIIs are still not outright bullish. The rally is position-adjustment driven, not yet a clean trend reversal.

1️⃣ Futures Positioning – Who is Really Driving This Move?

🔹 Latest Snapshot (02-01-26)

DII Futures: +41,489 (Long build-up)

FII Futures: –1,30,246 (Still heavily short)

Pro Futures: –15,352 (Mild short)

Cumulative Futures OI: –1,04,109 (Net short)

Daily Futures OI Change: +11,737 → Short covering

📌 Interpretation

FIIs have NOT flipped long, but are reducing risk.

Rising index + falling net shorts = classic short-covering rally.

DIIs remain the structural support pillar.

👉 This is not FII-led bullishness yet. It is FII risk reduction.

2️⃣ Options Structure – This Is the Key Bullish Input

🔹 02-01-26 Options Data

FII Option OI: –87,939 (Covering shorts)

Pro Option OI: +2,74,908 (Aggressive long gamma / put writing)

Cumulative Option OI: +1,86,969

Daily Option OI Change: +3,43,575 (Strong expansion)

📌 Interpretation

Pros are clearly positioning for upside / range expansion

Option writers are shifting higher

This explains why dips are shallow despite FII futures shorts

👉 Options are currently overpowering futures shorts.

3️⃣ Cash Market – Quiet but Supportive

FII Cash: +₹289 cr (Neutral-to-positive, no panic selling)

DII Cash: +₹677 cr (Consistent support)

📌 Absence of FII cash selling is critical

Earlier declines were sharp because cash + futures + options were aligned bearish. That alignment is now broken.

4️⃣ Chart Read (Daily Time Frame – 

🔹 Price Action

Close: 26,328

Strong bullish candle breaking recent consolidation

Price comfortably above rising short-term averages

Long-term trend support intact (major MAs well below)

🔹 Momentum

RSI ~62 → Healthy bullish momentum, not overbought

MACD turning up with histogram expansion → Trend continuation signal

🔹 Volume Profile / Supply Zones (from chart)

26,200–26,250 → Acceptance zone

26,400–26,450 → Immediate supply (option writers likely active)

26,600+ → Only possible if FIIs reduce futures shorts sharply

5️⃣ What This Combination REALLY Means

Component

Signal

FII Futures

Still bearish (structural drag)

DII Futures

Strong bullish anchor

Options (Pro)

Clearly bullish

Cash Market

Supportive

Chart Structure

Bullish continuation

👉 Net Result:

📈 Upside continuation is possible, but capped and selective

This is NOT a runaway trending market. It is a controlled grind higher, driven by:

Short covering

Option writers shifting strikes

DIIs absorbing supply

6️⃣ Probable Market Path (Next 1–3 Sessions)

🔹 Base Case (High Probability)

Range: 26,200 – 26,450

Buy dips near VWAP / 26,200–26,250

Profit booking near 26,400–26,450

🔹 Bullish Extension (Only If)

FII futures shorts reduce below –1.0 lakh

Then 26,550–26,650 opens up

🔹 Risk Scenario

If index fails to hold 26,150

And option OI expansion turns negative

→ Expect a fast mean reversion to 25,950–26,000

7️⃣ Trading & Positioning Guidance

✔ Preferred Strategy

Buy-on-dips, not breakout chasing

Option spreads / call calendars preferred over naked longs

❌ Avoid

Aggressive overnight longs above 26,400

Shorting blindly while option OI remains positive

🧠 Bottom Line (Desk Conclusion)

“The market is rising because bears are stepping back, not because bulls have taken full control.”

Until FIIs flip futures long, treat this as:

Bullish bias

Tactical, not structural

Option-led, not cash-led

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. In