Nifty 50 (23,852) and Nifty Bank (54,290) posted strong gains of 4.5 per cent and 6.4 per cent respectively last week. Both indices outperformed their respective futures contract, showing good demand in the spot market. Here are the insights based on the futures and options (F&O) data.
Nifty 50
The April Nifty futures (23,851) rallied 4.1 per cent over the last week. As this happened, the outstanding Open Interest (OI) of this contract dropped; it fell by 10 per cent and stood at 116.2 lakh contracts on Thursday. This shows considerable short covering.
On the other hand, the May Nifty futures (23,956) went up by 4 per cent and the OI, too, increased by about 50 per cent to 27.2 lakh contracts over the last week, denoting a long build-up. This indicates a potential roll-over of long positions from April to May series.
With respect to options, the Put Call Ratio (PCR) of April and May monthly expiries stood at 1.1 and 1.5 respectively on Thursday. A ratio higher than 1 is due to the comparatively higher number of put option selling. Traders sell puts if their expectations are positive.
So, broadly, the F&O data of Nifty 50 index suggests a bullish outlook.
Looking at the chart of Nifty futures, it can be stated that the current uptrend is strong and no loss of momentum is seen as yet. Hence, although there is a chance for some moderation, Nifty futures is expected to touch new highs.
For April Nifty futures, the nearest resistance is at 23,900 with the subsequent one at 24,200. Support levels are at 23,500 and 23,150.
For May Nifty futures, 24,000 is the immediate barrier followed by 24,300 and 24,500. Key support can be spotted at 23,550 and 23,280.
Strategy: At the open on Monday, exit the long position on April Nifty futures suggested last week. After this, go long on May Nifty futures if it breaks out of 24,000. Target and stop-loss can be 24,500 and 23,780 respectively.
In case the price of May futures drops, buy at 23,600 with stop-loss at 23,330. When the contract breaks out of 24,000, trail the stop-loss to 23,780. Exit at 24,500.
Nifty Bank
The April Nifty Bank futures (54,201) gained 5.9 per cent whereas the OI dropped 4 per cent last week to 20.8 lakh contracts, showing short covering.
But the May Nifty Bank futures (54,308) witnessed a long build up as its weekly gain of 5.8 per cent was accompanied by an increase in OI by 8.5 per cent. The outstanding OI as on Thursday was 6.4 lakh contracts. So, there might be roll-over of longs happening.
In options, the PCR of both April and May expiries were above 1, showing a positive bias. So, overall, the derivatives data of Nifty Bank indicate bullishness. In line with this, the chart of Nifty Bank futures shows that the momentum is strong. So, there are high chances for further gains.
With respect to April expiry futures, the notable support levels are at 53,200 and 52,300. Potential resistance levels are at 54,500 and 55,000.
For May expiry futures, supports can be seen at 53,320 and 52,600. Levels that can possibly resist the bulls are 54,600 and 55,200.
Strategy: Since April series is nearing expiry, we suggest considering May contracts for trading. Buy Nifty Bank futures (May) at 54,300 and on a dip to 53,320. Target and stop-loss can be 55,200 and 53,150 respectively.
Published on April 19, 2025
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