Nifty 50 (24,427) depreciated 1.8 per cent whereas Nifty Bank (53,656) was down 2.7 per cent last week. The futures and options (F&O) data point to bearish inclination. Here’s an analysis.
Nifty 50
Nifty futures (September) (24,569) lost 1.9 per cent last week. As it fell, the outstanding open interest increased. It moved up from 31 lakh contracts on August 22 to 167 lakh contracts on August 29. This denotes considerable short build-up.
The Put Call Ratio (PCR) of the weekly options stood at 0.5 on Friday. This shows that traders have sold twice the amount of call options when compared to put options. Participants sell calls when they are bearish.
That said, the PCR of monthly options is now at 1.20. So, there might be light ahead at the end of the tunnel. However, as it stands, indications from derivatives appear bearish.
Supporting this, the chart of Nifty futures shows that the recent fall has resulted in the formation of a lower high. Also, the price action shows strong bearish momentum.
Given the current chart set-up, the contract is likely to see further decline to 24,000. After touching this level, there might be some recovery, possibly to 24,300. Whether this uptick can become a bullish trend reversal or could be restricted to as a corrective move is uncertain at the moment.
On the other hand, if Nifty futures recovers from the current level of 24,569, it will face barriers at 25,000 and 25,300. Only a decisive breach of the latter can change the outlook positive. Potential resistance levels above 25,300 are at 25,500 and 25,750.
Strategy: Short Nifty futures (September) now at 24,570 and 24,750. Place initial stop-loss at 25,000. When the contract slips to 24,300, trail the stop-loss to 24,450. On a decline to 24,150, tighten the stop-loss further to 24,250. Book profits at 24,000.
Last week, we had suggested buying the September expiry 24500-put option at ₹150 for a target of ₹350. It is currently at ₹278. Retain this trade with a stop-loss at ₹180. Traders with higher risk appetite can revise the target upwards to ₹500 as there is more room for a rise in premium.
Nifty Bank
Nifty Bank futures (September) (54,060) lost 2.7 per cent last week. During this period, the open interest rose from 4.7 lakh contracts to nearly 29 lakh contracts, indicating considerable short build-up.
The PCR of options is currently at 0.85. A ratio less than 1 is bearish as there are more calls being sold.
The underlying Nifty Bank has breached the key base at 54,000 and the September futures has slipped below the support at 54,200. This is a bearish signal.
Considering the prevailing price action, Nifty Bank futures is likely to extend the decline. Notable supports from the current level are at 53,800 and 53,000. In case there is a recovery, the contract will face resistance at 54,600 and 55,000. Subsequent barrier is at 55,350.
Only a clear breakout of 55,000 can turn the outlook bullish. Until then, the bears will have an upper hand.
Strategy: Short Nifty Bank futures (September) at 54,100 and 54,600. Keep a stop-loss at 55,000. When the contract drops to 53,600, trail the stop-loss to 54,300. Revise the stop-loss to 53,600 when the price is down to 53,250. Exit at 53,000.
Instead of futures short, traders can buy put options. We suggest going long on 54000-put of September series at ₹600 and ₹450. Place initial stop-loss at ₹200. Book profits at ₹1,250.
Published on August 30, 2025
