Nifty 50 (24,631) appreciated 1.1 per cent and Nifty Bank (55,342) was up 0.6 per cent last week. Here we analyse the derivatives data of both indices and also the chart of index futures.
Nifty 50
Nifty futures (Aug) (24,685) rallied 1 per cent last week. During this period, the open interest of the contract saw a decline – it decreased from 172 lakh contracts on August 8 to 167 lakh contracts on August 14. This denotes exit of some short positions from the system.
With respect to options, the Put Call Ratio (PCR) of weekly and monthly expiries of Nifty options stood at 0.90 and 1 respectively. Broadly, the option positioning does not show a strong inclination on either side.
While the futures and options data show that the bears might be entering a weak zone, the chart shows Nifty futures remain below a key barrier at 24,800.
Only if the bulls can lift Nifty futures above 24,800, it can escape from the clutches of the bears. In case that occurs, the contract can quickly rise to 25,000. If this level is breached, the rally can extend to 25,400.
However, as long as the resistance at 24,800 holds, bears will have an edge over the bulls. In case the downtrend resumes, which is likely to happen in the short run, Nifty futures can drop to 24,000. This is a key support which can aid in reversing the trend.
Nevertheless, as it stands, Nifty futures has not fully shed the bearish inclination.
Strategy: Retain the short position on Nifty futures (Aug) initiated at 24,600. Maintain stop-loss at 24,800. When the contract slips to 24,400, revise the stop-loss to 24,600. Book profits at 24,000.
Alternatively, traders can buy 24500-put option (₹128.85). Target and stop-loss can be ₹480 and ₹60 respectively.
Nifty Bank
Nifty Bank futures (Aug) (55,504) gained 0.6 per cent last week. The open interest of this contract slightly dropped from 29 lakh contracts on August 8 to 28.5 lakh contracts on August 14. So, like in Nifty futures, there was some short covering over the past week.
The PCR of August monthly options stood at 0.7 at the end of last week. A ratio less than 1 is due to the relatively higher number of call option selling. Traders sell calls when they have bearish expectations.
Even the PCR of September contract, which is above 1, saw a drop. It fell from 1.31 on August 8 to 1.18 on August 14. The ratio declined as traders sold more call options compared to puts during the past week.
While the derivatives data give a mixed tone, the chart of Nifty Bank futures, too, indicate indecisiveness among traders. Over the past two weeks, the contract has been charting a sideways trend. That is, it has been oscillating between 55,000 and 55,850.
Although the inclination will remain bearish as long as the resistance at 55,850 remains valid, the support at 55,000 can be a challenge for the bears.
In case 55,000 is breached, Nifty Bank futures can see a deeper fall to 54,000. On the other hand, if the contract surpasses the hurdle at 55,850, the outlook, at least for the near term, can become positive. In such a case, it can rise to 56,500, a barrier. Subsequent resistance is at 57,500.
Strategy: As the resistance at 55,850 holds, traders can retain the Nifty Bank futures (Aug) short trade initiated at 55,500. Maintain the stop-loss at 56,200. If the contract slips below 55,000, trail the stop-loss to 55,500. Book profits at 54,000.
Traders who bought 55,000-put (recommended to be bought at ₹370) instead of futures short can hold on to the trade. Retain the target and stop-loss at ₹900 and ₹180 respectively.
Published on August 16, 2025
