Nifty 50 (25,049) and Nifty Bank (58,473) fell 2.5 per cent and 2.7 per cent last week. The futures and options data also hint at weakness. Since January contracts expire on Tuesday (January 27), we shall consider February contracts for analysis.
Nifty 50
Nifty futures (February) (25,203) slipped 2.7 per cent last week. It broke below a key support at 25,200 and the chart shows good bearish momentum.
Although there is a support ahead at 25,000, given the bearish momentum, we expect the contract to decline beyond this. Notable support below 25,000 is at 24,500. In the near term, Nifty futures is likely to fall to 24,500.
On the other hand, if the contract recovers from the current level of 25,203, it will face barriers at 25,500 and 25,850. That said, for the outlook to become bullish again, Nifty futures should surpass the resistance at 26,000.
But a rally looks unlikely as the positioning in futures is bearish. While the February contract slipped last week, the outstanding open interest ballooned from nearly 19 lakh contracts to 117 lakh contracts over the past week.
This substantial rise in open interest might also be due to the nearing of the January contract, making traders create new positions in the February contract. Nevertheless, this is a bearish indication.
With respect to options, the Put Call Ratio of February (monthly) contracts stood at 1.1 on Friday. This supports the bulls as the ratio greater than 1 means traders have sold a comparatively greater number of put options than call options. Traders sell puts when they are positive.
However, considering the price movement and the short build-up in futures, the outlook is bearish for Nifty futures.
Strategy: Short Nifty futures (February) now at 25,203 and on a rise to 25,500. Place stop-loss at 25,850. When the contract falls to 24,800, revise the stop-loss to 25,050. Book profits at 24,500.
Nifty Bank
Nifty Bank futures (February) (58,829) was down 2.8 per cent last week. Consequently, the contract breached a key support band of 59,500-59,600. This price region will henceforth act as a barrier.
Although the contract might see a minor uptick from the current level, it is expected to resume the downtrend and fall to 57,000 in the near term. Support below 57,000 is at 56,500.
In case Nifty Bank futures recovers from the current level, unless the resistance at 59,600 is invalidated, the rally might not sustain. If 59,600 is breached, the contract can extend the upswing to 60,000 and 60,500.
But like in February Nifty futures, February futures on Nifty Bank too has seen short build-up. The decline last week was accompanied by an increase in open interest from 1.3 lakh contracts to 9.7 lakh contracts.
Similarity can also be seen in PCR. The ratio for February options was at 1.1 on Friday, a positive sign. However, the recovery is not expected soon.
Strategy: Sell Nifty Bank futures (February) now at 58,829 and on a rise to 59,500. Keep initial stop-loss at 60,000. Revise the stop-loss to 59,000 when the contract falls to 58,000. Exit at 57,000.
Event: Traders should tread cautiously this week as the market can witness higher than usual volatility ahead of the presentation of the Budget on February 1. While risk averse traders are suggested to refrain from taking fresh positions, others should stick to stop-loss strictly to cut down losses if the view goes wrong.
Published on January 24, 2026
