Nifty 50 (24,655) lost 2.7 per cent and Nifty Bank (54,389) was down 1.9 per cent over the past week. Here is an analysis of futures and options data of both indices. As September contracts are nearing expiry, we shall consider October series for the analysis.
Nifty 50
Nifty futures (October) (24,812) depreciated 2.8 per cent last week. As it happened, the open interest of this contract increased from 23 lakh contracts to 98 lakh contracts.
The cumulative open interest of Nifty futures too went up from 178 lakh contracts to nearly 224 lakh contracts. This is an indication of short build-up.
Supporting the bearish bias, the Put Call Ratio of September expiry options stood at 0.52. Also, the ratio for the October contract dropped from 1.4 to 1 over the past week. These are indications of a relatively greater number of call options writing, a bearish signal.
Coming to the price action, a decline over the past week has negated the recent breakout. Given the current momentum, we are likely to see the downswing extend.
However, there is an important support level ahead at 24,675. A breach of this can open the door for a further decline, possibly to 24,500, a potential support. Subsequent support is at 24,200.
On the other hand, if Nifty futures recover, it will face resistance at 25,000 and 25,200. Only a clear breakout of the latter can turn the outlook positive.
That said, given the sharp swing in price since the beginning of September, there is a good chance for a consolidation in the forthcoming sessions. That is, Nifty futures is likely to oscillate between 24,650 and 25,200 in the near term despite the bearish indications from the derivatives data.
Strategy: As we expect Nifty futures (October) to chart a sideways trend in the upcoming sessions, we suggest staying out for now.
Nifty Bank
Nifty Bank futures (October) (54,803) was down 2.1 per cent last week. While the contract fell, the open interest nearly quadrupled from 3.1 lakh contracts on September 19 to 11.7 lakh contracts on September 26. This denotes fresh short build-up.
Also, the cumulative open interest of Nifty Bank futures increased from 24 lakh contracts to nearly 29 lakh contracts during this period. So, overall in futures, the data show arrival of fresh short positions.
Substantiating the bearish inclination, the PCR of September and October expiry options stood at 0.60 and 0.90. A ratio less than 1 is due to the relative greater number of call selling, which is a bearish sign.
In Nifty futures, while the futures and options data showed bear signals there are support levels nearby. Similarly in Nifty Bank futures, too, the data indicates bearishness. However, there is a crucial base approaching, which has the potential to arrest the fall.
From the current level of 54,803, the immediate support can be spotted at 54,250. A breach of this can open the door for a fall to 54,000 and 53,500.
On the other hand, if the contract recovers, either from the current level or after a decline to 54,250, it can face a barrier at 55,600 and 56,200. Only a decisive breakout of the latter can change the outlook to positive.
Overall, even though the futures and options data show weakness, the price action shows there is a possibility for the contract to see a consolidation. The sideways movement can be between 54,250 and 55,600 for the near term.
Strategy: We suggest staying out as the prevailing price action hints at a sideways movement in the coming days.
Published on September 27, 2025