On Tuesday, November 12, the NSE Nifty 50 remained under pressure, struggling to sustain gains in Monday’s trading session due to persistent bearish sentiment. Despite attempts at a recovery, the index has found itself range-bound between 24,000 and 24,500, as traders await clarity on market direction. The technical indicators and Futures & Options (F&O) data offer insights into the probabilities of a breakout or continued consolidation.
Nifty technical analysis: key levels and indicators
On the daily chart, Nifty formed a “doji” candle pattern, which often signals market indecision. This pattern reflects uncertainty among traders, as they remain cautious amid choppy market conditions. The technical setup shows a few critical resistance and support levels that could shape Nifty’s trajectory.
At the higher end, the 100-day Exponential Moving Average (DEMA) acts as a resistance near 24,430, with additional resistance at 24,540—last week’s high. Should Nifty overcome these levels, it may suggest renewed buying interest. However, on the downside, the 150-day DEMA, located around 23,990, is expected to act as short-term support, followed by a more substantial support level at 23,800. Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates, notes that the lower support levels are crucial in defining the extent of market correction or consolidation in the near term.
Meanwhile, the Bank Nifty index has been consolidating between 50,500 and 52,580 for several weeks. According to analysts, if Bank Nifty can breach the upper boundary of 52,580, it may signal the start of an upward trend. Otherwise, it is likely to continue within this range.
Insights from nifty and bank nifty options data
An analysis of options data reveals mixed sentiments about Nifty’s immediate direction. According to Sahaj Agarwal, Senior Vice President and Head of Derivatives Research at Kotak Securities, Nifty currently has strong support at the 23,950 level. This support increases the probability of a bounce back toward the upper end of the range at 24,500-24,700. However, if Nifty breaks below 23,950, it may face additional downward pressure, with potential targets between 23,300 and 23,500.
Options data also highlights a rise in Call writing, particularly at the 24,500 strike price, suggesting strong resistance at this level. Concurrently, reduced Put writing indicates a shift in sentiment, as bearish momentum builds. Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities, observes that the highest open interest is concentrated at the 24,500 Call and 24,000 Put, implying strong support and resistance levels for the index. The modest increase in the Put-Call Ratio (PCR) from 0.67 to 0.72 reflects a cautious market, with sellers maintaining control. The “max pain” level for Nifty, where most options positions are likely to expire with minimal gains, stands at 24,300.
In the Bank Nifty options space, increased Call writing between 52,000 and 52,500 and a reduction in Put writing indicate a rise in bearish momentum for the index. The Bank Nifty PCR has shifted upward from 0.64 to 0.83, with a max pain level at 52,000, indicating where the most options pain is expected.
Market participation: FII, retail, and proprietary traders’ positions
A closer look at trading patterns among different market participants shows a mixed sentiment. Foreign Institutional Investors (FIIs) emerged as net buyers in index futures on Monday, after three sessions of selling. They bought index futures worth Rs 335.48 crore, including 4,513 contracts of Bank Nifty futures valued at Rs 353.23 crore and 249 contracts of MidCap Nifty futures for Rs 15.49 crore. However, they net sold Nifty futures worth Rs 26.50 crore, indicating a cautious stance on the broader market.
The open interest (OI) data for FIIs in Nifty futures rose by 2.5% to 1.45 lakh contracts, while Bank Nifty OI declined by 2.2% to 1.35 lakh contracts. This reflects a marginally bullish outlook on Nifty but continued caution on Bank Nifty. The FII long-short ratio in index futures slightly increased to 0.33, implying that FIIs hold about three short positions for every long position.
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Retail investors, meanwhile, maintained a bullish bias with a long-short ratio of 1.95, suggesting two long positions for every short. Proprietary traders saw a 14 basis point (bps) increase in their long-short ratio to 0.74, indicating a tilt towards bearish positions with roughly three bearish bets for every two bullish bets.
Stocks in F&O ban period
As of Tuesday, November 12, five stocks—Aarti Industries, Aditya Birla Fashion Retail, Granules India, Hindustan Copper, and Manappuram Finance—are under the F&O ban period. These stocks are restricted from taking new positions in the derivatives segment due to exceeding specified limits, which usually occurs when there’s heavy speculative trading.
Outlook for nifty: Consolidation or breakout?
Nifty appears poised for further consolidation within the 24,000-24,500 range, with the possibility of a bounce higher if support levels hold. The mixed data from options and FII trading patterns suggest that volatility is likely to persist in the near term. A break above 24,500 could pave the way for fresh buying momentum, while a drop below 23,950 may extend Nifty’s downside.
Overall, the market’s cautious sentiment reflects investor uncertainty in a complex macroeconomic environment, but a decisive break in either direction could set the tone for the upcoming trading sessions.
