Nifty wrapped up the September derivatives series with only a muted 0.59% gain, struggling to sustain momentum as sellers dominated every rebound. Despite the index holding above the 24,500 mark, its structure remains fragile, weighed down by persistent FPI (Foreign Portfolio Investor) shorts and high rollover levels.
Futures rollovers stood at 82.6% with a cost of 0.72%, signaling stretched bearish bets. Meanwhile, FPIs extended shorts for the fourth consecutive series, pushing the long-short ratio to a multi-year low of 5.98%, alongside equity outflows worth ₹35,301 crore.
Until Nifty decisively reclaims the 25,000 resistance, the undertone remains weak, and a sell-on-rise strategy is preferred. However, with extreme short positioning, the index also remains vulnerable to sharp short-covering rallies.
September Recap – Bears Take the Edge
The September series was volatile and headline-driven, with bulls unable to seize control. Every recovery attempt faced selling pressure, leaving the series to close nearly flat. Despite a small gain of 0.59%, the conviction was weak.
High rollover levels at 82.6%, compared with averages near 80%, reflect traders carrying forward bearish positions, often a precursor to sharp reversals when sentiment turns.
October Series – Fragile Start Despite Fresh Longs
The October series opened with a rise in open interest to 1.82 crore shares, hinting at fresh long positions. However, traders remain cautious, wary of global headwinds and weak technical signals.
India VIX stayed muted at 11.07, but its late-series uptick hints at nervous undercurrents. Historically, such low volatility often precedes sharp spikes, suggesting traders must remain alert.
FPI Flows – Shorts at Extremes
FPIs have maintained a strongly bearish stance, increasing net shorts to 1.76 lakh contracts. Persistent equity outflows underline caution, with FIIs unwilling to unwind despite occasional short covering during the series.
Such extreme positioning could set the stage for a powerful short-covering rally, but without price confirmation, reversals remain uncertain.
Options Market – 25,000 the Battlefield
Options data highlights a tug-of-war:
- Resistance: Heavy call writing at 24,800–25,000
- Support: Strong put writing at 24,500, with 24,000 as the ultimate floor
A breakout above 25,000 may unleash covering rallies toward 25,500–25,800, while a breakdown below 24,500 risks accelerating declines to 24,000.
Technical Outlook – Bearish Patterns Intact
The index continues to form a lower-high, lower-low structure, staying below key EMAs. Nine consecutive negative closes in September reflect persistent weakness.
Currently, Nifty trades precariously near 24,600–24,500, a make-or-break zone. Breach of this level may open deeper corrections, while any relief rally could face heavy supply near resistance.
A recent Moneycontrol report also underscored the pressure from persistent FPI shorts and high rollovers, keeping the market structure fragile
Strategy for Traders
- Primary view: Sell on rise until Nifty reclaims 24,800–25,000
- Bullish trigger: A decisive close above 25,050 could force short unwinding toward 25,500–25,800
- Bearish trigger: Breakdown below 24,500 could extend the fall to 24,000
For now, staying tactical, nimble, and defensive is key, aligning with bearish momentum but staying ready for a possible short-covering trap.
Easy & quick
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