View & vision
Let us break this into (A) Participant positioning, (B) Strike-wise OI + PCR, (C) Chart structure, and then (D) Probable Nifty path & tradeable levels.
A) Participant-wise positioning (trend, not single day)
1️⃣ Futures OI (trend is key)
FII futures net:
Persistent heavy short build-up for weeks
Latest: –2,03,219
DII futures net:
Consistently long, but not increasing aggressively
Latest: +65,557
PRO futures: Neutral / marginally long → not defending levels
👉 Interpretation
This is a classic “institutions leaning short, DIIs cushioning” structure.
DIIs are absorbing, not reversing the trend.
This is trend-following bearish, not panic capitulation yet.
2️⃣ Options OI (this is more dangerous)
FII option OI net: –6.84 lakh
PRO option OI net: –3.80 lakh
Cumulative option OI: –10.64 lakh
That’s massive net option selling on the CALL side + aggressive PUT buying unwinds.
👉 This tells us:
No hedge being built
Market is being allowed to fall
Smart money expects lower settlement levels
B) Strike-wise OI structure (3 Feb expiry)
From your screenshot:
🔴 Put OI concentration
25000 PE → very heavy OI (≈49 lakh)
24700–24800 PE → decent OI but already under stress
⚠️ Important:
Once 25,000 broke, put writers did not roll down aggressively → sign of fear, not confidence.
🟢 Call OI concentration
25000 CE
24900 CE
24850 CE
This creates a tight call wall between 24850–25000.
👉 Max Pain = 25,000, but PCR = 0.43
This is bearish PCR, not supportive.
C) Chart structure (Daily timeframe)
1️⃣ Price action
Breakdown below pivot + moving average cluster
Large bearish expansion candle
No demand tail at S1 → sellers in control
2️⃣ Momentum
RSI ~ 30–31
This is weak oversold, not reversal oversold
(No bullish divergence yet)
3️⃣ Volatility & breadth
Histogram expanding negative
No contraction = trend still active
👉 This is distribution → continuation, not exhaustion.
D) Market sentiment (net view)
📉 Sentiment summary
Factor
Bias
FII futures
Strongly Bearish
Option positioning
Bearish continuation
PCR
Bearish
Chart structure
Breakdown
DII support
Absorption only
👉 Net sentiment: BEARISH with risk of further acceleration
E) Probable Nifty 50 movement (next 1–3 sessions)
🔻 Immediate downside levels
24,700 – minor pause
24,550–24,500 – very high probability test
If this zone fails on closing basis:
24,080 (S2)
Extreme: 23,900–23,850 (panic extension)
🔼 Upside (only if short covering happens)
24,950–25,000 → stiff supply
Above 25,050, only then:
25,300–25,350
⚠️ Until 25,050 is reclaimed, any bounce is sell-on-rise.
F) What to expect intraday
Gap-down or flat → sell rallies
Fast drops, slow recoveries
Put buying spikes on breakdowns
No sustained V-shape unless:
FII option OI starts covering
OR PCR rises above 0.7
Bottom line (desk-style conclusion)
This is not a bottoming structure yet.
It is a controlled institutional downtrend, where DIIs are cushioning but not reversing.
Odds favor 24,500 before any meaningful bounce.
Effect analysis of imposition of STT in budget
Let us connect the circuit–macro linkage — the new STT/QT tax swipe + existing bearish positioning by FIIs has changed the incentive structure in the market & break this down cleanly into why sentiment shifted, whether it’s structural or transient, and what that means for the next 1–3 weeks.
📌 1) Why the Sentiment Shifted: Tax Impact
🔹 Budget Tax Change Impact
The imposition of STT/QT-style levies (especially on F&O) changes the risk/reward calculus for institutional flow:
Derivatives become more expensive to trade
LEVERAGED participants (FIIs/pros) are most affected
Hedges become less efficient
→ Result:
FII risk appetite shrinks → selling pressure + reduced buying urgency
This is not a classic technical sell-off alone — it’s a confidence distortion triggered by policy.
📌 2) Is this Sentiment Transient or Structural?
Let’s separate short-term behavior from structural trend:
🟡 A) Short-Term (Next 3–10 sessions)
Bearish continuation is likely, because:
FII positioning was already bearish prior to the budget
The STT/QT news reinforces incentive to reduce risk
Option positioning is skewed bearish (PCR low)
Chart breakdown confirms fear > strength
➡️ So, for the next few sessions:
Probability of further downside > upside rebound
🔴 B) Mid-Term (Next 2–4 weeks)
Here’s where nuance matters:
Scenario A — Shadow Reaction
If markets fully price in the tax effect, the “shock” wears off and we see:
✔ FII selling slows
✔ DIIs absorb more
✔ Range forms
This would look like a sideways range or shallow rally, not aggressively higher.
Scenario B — Sentinel Behavior Continues
If tax drag significantly worsens trading economics for foreign flow:
✔ FIIs may continue to hedge aggressively
✔ Market may consolidate at lower levels
✔ Only technical relief rallies
This would create:
➡ Lower highs and lower lows
📌 3) Indicators to Track (Leading measures)
View on whether this sentiment persists:
📊 A) FII Cash Movement
If FIIs reverse to net buyers, sentiment flip possible
If they stay net sellers or flat, caution remains
📊 B) PCR Breadth & Skew
Rising PCR towards normal range (0.7–1) = short covering
Sustained low PCR (<0.5) = sellers dominating structurally
📊 C) Option OI Shift
If PUT unwinding accelerates without premium decay → bulls covering
If PUT OI stays elevated/expands → bears still hedged
📊 D) Price Reaction at Key Zones
24,500 zone reaction
24,080 support test How price reacts there tells whether absorption or capitulation continues.
📌 4) Realistic Probable Path (Conditional)
🔻 Base Case (Most Probable)
Weak rebounds
Failure at 24,950–25,050 supply
Re‐test 24,500
If breakdown here → 24,080
This is lower-highs, lower-lows swing action
🔼 Alternate Case (If Sentiment Stabilizes)
If tax impact is absorbed
FII flows neutralize
Then market may range
Then break upward from range
BUT this requires strong reversal in positioning + absorption by DIIs
📌 5) Key Takeaways
Yes — the budget tax change amplified bearish sentiment.
But is it permanent?
Not necessarily.
It’s the combination of:
Technical structures
Positioning stress
Policy drag
That’s fueling sentiment now — but each has its own lifespan.
So:
📍 If the market sees:
✔ Slowing of FII selling
✔ PCR stabilizing
✔ Price forming a base →
Then sentiment will normalize.
📍 If the market sees:
✘ Continued FII hedging
✘ Bearish OI expansion
✘ Lower support breaks →
Then this current negative sentiment can persist further.
📌 Practical view
Trade bias for next 2–4 sessions:
➡ Bearish unless strong daily close above 25,050
Wider trend signal:
Sustained FII reduction in net short + PCR rising = trend change
Without that → bearish remains the dominant theme
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.
