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Nifty 50 (24,719) and Nifty Bank (55,527) depreciated by 1.1 per cent and 1.9 per cent last week. But this might not have turned the outlook bearish. Here’s an analysis.
Nifty futures (Jun) (24,727) lost 1.5 per cent over the last week. As it happened, the open interest dropped by 3 per cent and it stood at 118 lakh contracts on Friday. This denotes some long unwinding.
The Put Call Ratio (PCR) of the nearest weekly expiry options stood at 0.70 on Friday. A ratio less than 1 is due to the relatively higher number of call option selling. Traders sell calls when their outlook is bearish.
Also, the PCR of June monthly options was at 1 on Friday, dropping from 1.15 a week ago. So, the option positioning indicates a clear bearish bias.
However, the price action shows that the bears have not gained complete control. Although Nifty futures (Jun) declined, on Friday, there was a recovery on the back of the support at 24,650.
Therefore, the price range of 24,650-25,250, within which the contract has been trading over the past month, remains valid. Until either of these levels are taken out, we cannot be certain about the next leg of trend.
Yet, the broader trend is bullish. In case Nifty futures (Jun) recovers and breaks out of 25,250, it can rally to 26,000. Resistance above 26,000 is at 27,000.
On the other hand, if bears gain more traction and drag Nifty futures (Jun) below 24,650, the downtrend will most likely extend to 24,200 and 24,000, potential support levels.
Strategy: Hold Nifty futures (Jun) buy trade initiated at 24,970. But revise the stop-loss upwards from 24,450 to 24,550 to reduce the risk of loss due to geopolitical uncertainties. Retain the target at 26,000.
Option traders can consider buying June expiry 24,800-call option, which closed at ₹228.40 on Friday. But this is a short term trade. Target and stop-loss can be ₹500 and ₹100 respectively.
Nifty Bank futures (Jun) (55,614) declined 2 per cent over the past week. There was also a drop in open interest – it decreased by 7 per cent and stood at 19.6 lakh contracts on Friday. This shows long unwinding.
The PCR of June expiry options fell from 1 on June 6 to 0.70 on June 13, indicating addition of more call short positions when compared to puts. This is a bearish sign.
While the futures and options data gives Nifty Bank futures (Jun) a bearish bias, the chart shows that the contract remains above key support levels.
The 23.6 per cent Fibonacci retracement level of the prior uptrend lies at 55,400, which is the nearest support. Other notable supports are at 55,000 and 54,000. So long as the base at 54,000 stays valid, Nifty Bank futures (Jun) will retain positive inclination.
The contract is likely to resume the uptrend from the current level or after a decline to 55,000 or 54,000. This upward move can take Nifty Bank futures (Jun) to 57,800-58,000 price band. Nearest barrier above 58,000 is at 60,000.
Strategy: Given the uncertainty in the market, triggered by the geopolitical developments, and that there is a chance for Nifty Bank futures (Jun) to extend the current dip further before resumption of rally, we recommend traders stay out for now.
Buy Nifty Bank futures (Jun) if it drops to 55,000. Target and stop-loss can be 57,500 and 54,000 respectively.
Published on June 14, 2025
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