Futures & Options Insights for Wednesday, October 23: The Nifty October futures experienced their largest single-day loss of the month yesterday, declining over 1%. As a result, Nifty futures have shed nearly 7% since the September expiry.
Despite this downturn, Foreign Institutional Investors (FIIs) accounted for 14% of the traded volume in Nifty futures on Tuesday and were net buyers of 182 contracts. However, FIIs have reduced their open positions in Nifty futures by 38% since the start of October and have maintained a short position since October 10.
From a technical perspective, the Nifty has confirmed a lower top-lower-bottom structure on the daily chart and has also broken down from a “Head and Shoulders” pattern. Notably, the index has fallen below the 89-day exponential moving average (DEMA) for the first time since June. Given the current chart structure and the broad-based sell-off, the outlook for bullish traders appears challenging, with expectations of further downside, according to Rajesh Bhosale, Equity Technical Analyst at Angel One.
Key support for the Nifty is located around the 24,200 level, which marks a bullish gap from August, with immediate support at 24,300. On the upside, resistance is expected in the 24,650 to 24,700 range.
In related movements, Bank Nifty futures also declined by over 1%, with open interest (OI) rising by 3.3%. Immediate support for Bank Nifty is seen around the 51,000 to 50,800 levels, where a potential pullback could occur. Conversely, the 52,000 to 52,250 range is identified as a strong supply zone for the index, according to Aditya Agarwal, Head of Derivatives & Technical Analysis at Sanctum Wealth.
