Nifty 50 (25,461) and Nifty Bank (57,032) lost 0.7 per cent each last week. Here is an analysis of the futures and options data of both indices:
Nifty 50
Nifty futures (Jul) (25,540) dropped 0.8 per cent over the past week. Also, the open interest of the contract decreased; it was down 10 per cent and stood at nearly 135 lakh contracts on Friday.
The price and the open interest declining at the same time denotes liquidation of long positions. That said, only a small portion has gone out and the bulls appear to be in control.
With respect to options, the Put Call Ratio (PCR) of weekly options, at 0.75, is less than 1 because of relatively greater call option selling, a bearish note. However, the PCR of July (1.20) and August (2) monthly options are well above 1. Thus, the weakness in Nifty 50 is likely to be temporary.
In line with this, the chart of Nifty futures (Jul) shows that the support at 25,400 is still valid. Just below this lies the 21-day moving average at 25,300. Thus, 25,300-25,400 is a strong support. As long as this holds, the broader inclination will be bullish.
We expect Nifty futures (Jul) to resume the rally soon. Once the uptrend is back, the contract can rise to 26,500 and 27,000, notable barriers. In case the contract drops from the current level and slips below the support at 25,300, the downswing can extend to 25,000.
Strategy: Hold on the Nifty futures (Jul) long with stop-loss at 25,300. Raise this to 25,700 when the contract surpasses 26,000. Book profits at 26,500.
Alternatively, traders can consider buying 25,800-call of July monthly expiry. This contract closed with a premium of ₹203.85. Place a stop-loss at ₹100. When the option price rises to ₹400, tighten the stop-loss to ₹300. Exit at ₹500.
Nifty Bank
Nifty Bank futures (Jul) (57,294) slipped 0.6 per cent last week. The open interest, too, dropped. It decreased by 13 per cent and was at 20 lakh contracts by Friday’s close. This indicated long unwinding.
While the PCR of July options is about 1, the ratio for August options is at 1.50. Although the call option selling over the last week was relatively higher than the puts, this is not likely to alter the trend as the broader uptrend is still intact.
Overall, the F&O positioning shows some weakness, but it can be temporary as the price action hints at a rally.
The chart shows that Nifty Bank futures (Jul) is trading above the key support band of 57,000-56,800. The probability of a rebound is high. Such an upmove can lift the contract to 60,000 in the short term.
On the other hand, if the contract falls from the current level and breaches the support at 56,800, the fall can extend to 56,300, the nearest support below 56,800. Subsequent support is at 55,700.
Strategy: Last week, we suggested buying Nifty Bank futures (Jul) at 57,000. Maintain the stop-loss at 56,300. When the contract rallies past 58,000, trail the stop-loss to 57,000. Book profits at 60,000.
Traders can consider buying a call option instead of futures long. We suggest buying the 58,000-call option, which closed at ₹460.10 on Friday. Place a stop-loss at ₹240. When the contract moves up to ₹700, alter the stop-loss to ₹450. On a rally to ₹800, tighten the stop-loss further to ₹600. Exit at ₹950.
Published on July 5, 2025
