Nifty Ends August Series on a Cautious Note; September Kicks Off with Fragile Sentiment

August Series Recap: Bears Tighten Grip

The Nifty closed the August series with a 0.95% decline, as sellers dominated every rebound. Futures rollovers surged to 83.63%, far above the three- and six-month averages, indicating that bearish bets are being carried forward at a premium.

• Closing Level: 24,511.25 (down 211 points).
  
  
• FPI Outflows: Foreign Portfolio Investors sold equities worth ₹38,590 Crore.
  
  
• Long-Short Ratio: Fell to a multi-year low of 8.24%, reflecting extreme bearish positioning.
  
  
• Rollovers: Nifty rollovers jumped to 83.63% vs. 75.71% in July.
  
  

Despite heightened volatility, every bounce was sold into, leaving buyers trapped.

September Series Opens Weak

The September series opened with Nifty's OI rising to 1.69 Crore shares from 1.64 crore in August, signaling fresh short positions. This setup suggests a bearish-to-range-bound phase, as uncertainty persists.

Volatility Watch: VIX Stays Muted

• India VIX closed at 12.17, steady within its comfort zone of 10–13.
  
  
• Despite global headwinds (trade tensions, economic slowdown fears, weak earnings, FPI outflows), volatility remains muted.
  
  
• Such complacency may not last, making risk management crucial as September unfolds.
  
  

FPI Flows: Shorts Dominate

FPIs remained aggressive sellers:

• Net shorts: Jumped to 1,69,000 contracts vs. 1,37,660 earlier.
  
  
• Cash outflows: ₹38,590 Crore in August.
  
  
• Long-Short Ratio: At a multi-year low of 8.24%.
  
  

Such extreme positioning could trigger a sharp short-covering rally if buying strength emerges — but confirmation is key.

Options Market Radar: Key Levels to Watch

• Resistance: Heavy call writing at 24,800 & 25,000 confirms them as strong hurdles.
  
  
• Support: Put writing concentrated at 24,500, with 24,000 as the decisive threshold.
  
  
• Scenarios:
  
  
  • A breakout above 25,000 may spark a rally toward 25,500–25,800.
    
    
  • A breakdown below 24,400 could drag Nifty to 24,000.
    
    

Technical Outlook: Weak Structure Persists

The Nifty remains in a fragile setup, trading well below its 20-, 50-, and 100-day EMAs.

• Swing High: 25,153 remains unchallenged.
  
  
• Supports: 24,400–24,500 is the make-or-break zone.
  
  
• Monthly Chart: Closed near two-month lows, showing bearish momentum.
  
  
• Candlestick Pattern: Sustained trade below 24,337 could confirm a Bearish Harami.
  
  
• Daily RSI: Hovering near 40, signaling weak momentum.
  
  

Strategy Playbook for Traders

• Bearish Bias: As long as Nifty trades below 24,800–25,000, the tone remains weak.
  
  
• Reversal Trigger: A decisive move above 25,150 could ignite short-covering rallies.
  
  
• Downside Risk: A breach below 24,400 may extend the fall toward 24,000.
  
  
• Trading Strategy:
  
  
  • Stick to a sell-on-rise approach near the resistance level.
    
    
  • Stay nimble — a breakout above 25,150 warrants a shift in bias to bullish.