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Nifty 50 (24,853) lost 0.7 per cent last week whereas Nifty Bank (55,398) closed the week by a marginal 0.1 per cent higher. Here is an analysis of the derivatives data of both indices.
Nifty 50
The May Nifty futures (24,880) was down 0.8 per cent last week. The June Nifty futures (24,973) lost 0.9 per cent. Yet, both the contracts are at a premium to the underlying index, a positive indication.
While the outstanding Open Interest (OI) of May futures saw a drop (by 13 per cent to 104 lakh contracts), the same for June futures rose (by 127 per cent to 82 lakh contracts). Combining with the price movement there is an indication of long unwinding in May contract and short build-up in June series.
However, the chart shows that the trend remains bullish as key support levels stand valid. Also, both May and June contracts remain above their 21-day moving average. So, the correction witnessed last week is only likely to be temporary.
Since May futures is nearing expiry, we are considering the June contract for projections. From the current level of 24,973, Nifty futures (June) can see a rally to 25,800 and 26,000 in the near term.
The short-term outlook will turn bearish only if Nifty futures (June) slip below the support at 24,000. Notable support below 24,000 is at 23,000.
Strategy: We suggested longs on Nifty futures (May) at an average price of 24,885. Traders can roll this over to June expiry. That is, exit (sell) the Nifty futures (May) at the current level of 24,880 and buy Nifty futures (June) at 24,970. Target and stop-loss can be 26,000 and 24,450 respectively.
As an alternative, traders who followed our suggestion of buying 25,500-call of June monthly expiry can retain the position. The premium of this stood at ₹223.70 on Friday and the average purchase price is ₹251. When option premium rises to ₹500, revise the stop-loss to ₹350. Exit at ₹600.
Nifty Bank
The May Nifty Bank futures (55,496) and the June Nifty Bank futures (55,754) were largely charting a sideways trend last week. While the OI of the former decreased by 4 per cent to 16.2 lakh contracts, the same for the latter increased 22 per cent to 4.5 lakh contracts.
As the price is in a sideways band, the change in OI is not very significant. Nevertheless, the price action shows that the trend remains bullish, and the probability of a rally is higher than the probability of a fall from the current level.
Supporting this, the Put Call Ratio (PCR) of June expiry options rose from 0.80 on May 16 to 1.10 on May 23. An increase in ratio is due to selling of a comparatively higher number of put options than calls. Traders sell puts when they hold a positive outlook.
As per the chart, Nifty Bank futures will retain the bullish inclination until the support at 54,000 is valid. Since May is nearing expiry, we consider the June contract for analysis.
Nifty Bank futures (June) has its nearest resistance at 56,000. Once the contract breaks out of 56,000 it can quickly rise to 57,000 and then to 58,000 in the short term.
On the other hand, if the contract declines, it can find support at 55,000 and 54,000. A breach of 54,000 can lead to a deeper fall to 52,500, a support. Subsequent support is at 52,000.
Strategy: Liquidate the longs on Nifty Bank futures (May) initiated at 53,700. Go long on Nifty Bank futures (June) after it breaks out of 56,000. Target and stop-loss can be 58,000 and 55,000 respectively.
For fresh trades in options, we suggest traders wait for the index to break out of 56,000 and then consider buying an at-the-money June call.
Published on May 24, 2025
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