Nifty 50 (22,829) and Nifty Bank (51,002) opened last week with a huge gap-down. However, they recovered through the week and limited the loss to 0.3 per cent and 1 per cent respectively. Here’s an analysis of the derivatives data.

Nifty 50

The April Nifty futures (22,918) lost a marginal 0.2 per cent last week. Also, the outstanding Open Interest dropped by a little over 5 per cent and stood at 129.2 lakh contracts on Friday. This shows some short covering.

The Put Call Ratio (PCR) of the nearest weekly (April 17) expiry is currently at 0.80. A ratio less than 1 indicates relatively higher number of call option selling, a bearish sign. But PCR of April monthly expiry is at 1.1, a positive indication.

Futures has seen short covering but the PCR of weekly options suggests a bearish indication. So, there is no clarity in trend by looking at the positioning of derivative traders.

The chart shows that Nifty futures (April) rebounded strongly from the support at 22,000. However, there are resistances ahead at 23,150 and 23,500. A rally past the former can keep the weekly trend positive.

But in case the contract falls, it can find support at 22,500 and 22,000. A breach of 22,000 can open the door for a deeper fall, possibly to 21,300.

As it stands, considering the futures and options (F&O) data and the chart set-up, the direction of the upcoming trend is unclear.

Strategy: Refrain from trading. But traders with high risk appetite can buy Nifty futures (April) if it surpasses 23,150. Target and stop-loss can be 23,900 and 22,800 respectively. But we reiterate that this trade carries higher risk.

Nifty Bank

The April Nifty Bank futures (51,162) posted a loss of 0.8 per cent last week. At the same time, the outstanding OI of this contract decreased by nearly 5 per cent and stood at 21.7 lakh contracts on Friday. This shows covering of short positions.

The PCR of Nifty Bank options is now at about 0.90. So, the number of calls sold is comparatively higher than puts sold, a bearish sign. But this is not a strong signal particularly when seen with exit of short positions in Nifty Bank futures.

Therefore, broadly, Nifty Bank futures looks to be in a better position than Nifty futures.

Nifty Bank futures (April) after opening last week with a substantial gap-down, saw a quick recovery, lifting the contract back into the range of 51,000 and 52,300. The base at 49,500 helped the contract rebound.

But for the contract to build a sustainable rally, it should break out of the barrier at 52,300. In such case, it can surge to 55,000 and 56,000.

On the other hand, if Nifty Bank futures declines, it can find support at 51,000 and 50,300. Subsequent support is at 49,500.

Broadly, while the F&O data is not giving a definite positive inclination, the chart does. However, there are risks as the market has been highly volatile in recent times.

Strategy: While risk-averse traders can stay out, participants with higher risk tolerance can buy Nifty Bank futures if it dips to 50,500. Target and stop-loss can be 52,300 and 49,800 respectively.

Published on April 12, 2025

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