Foreign Institutional Investors (FIIs) are entering the March futures and options series with a bearish outlook, as revealed by the National Stock Exchange (NSE) data. It appears that FIIs have carried over their short positions from the February series into March.
The data indicates a significant bearish stance, with a long-short ratio in index futures at 0.19. This ratio suggests that FIIs are holding more than five short positions for every long position in index futures. FIIs have maintained this bearish approach since the start of the January series when Nifty stood around 23,800, Bank Nifty at 51,300, and MidCap Nifty at approximately 12,800. Since then, these key index futures have dropped by 5.3%, 5%, and 13.6%, respectively.
Compared to the February series, FIIs have increased their open positions in index futures by 12.5%, particularly in Bank Nifty futures.
Performance in February Series
In the recently concluded February series, major indices showed losses: Nifty dropped by 3%, Bank Nifty fell by 1.1%, and MidCap Nifty declined by 6.3%.
Technically, Nifty’s trading activity on Thursday showed uncertainty but managed to hold the 22,500 support level. As long as Nifty maintains this support, there could be a potential rally toward 22,700–22,800. However, a break below 22,500 might lead to further downward pressure toward 22,300–22,100, according to Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates.
Trading Sentiment of Other Participants
In contrast to the bearish positions of FIIs, other key market participants, including Domestic Institutional Investors (DIIs), retail investors, and proprietary traders, are showing more bullish tendencies in index futures. Retail investors, in particular, are the most optimistic, with a long-short ratio of 2.7, meaning there are more than five long positions for every two short positions. This ratio has remained around 2.5 since mid-January 2025.
Meanwhile, DIIs have a long-short ratio of 1.5, and proprietary traders have a ratio of 1.3, both indicating a more balanced approach.
Nifty and Bank Nifty Options Outlook
The Nifty options market continues to reflect a bearish bias, with call writers dominating over put sellers. This suggests that traders are taking a defensive stance. Significant open interest has accumulated at the 23,000 strike in call options, marking it as a major resistance level. At the same time, put options are building up at the 22,500 strike, providing strong support at lower levels, according to Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities.
The 22,600–23,000 range is seeing substantial call writing, while rising put activity at lower strikes points to a battle between bulls and bears. The Put-Call Ratio (PCR) has increased from 0.63 to 0.78, indicating slightly improved sentiment, although sellers continue to dominate despite some buying attempts.
For Bank Nifty, the derivatives data also points to a bearish trend. There has been a surge in open interest at the 49,000 strike in call options, establishing it as a strong resistance level. At the same time, substantial put writing at the 48,000 strike shows that buyers are defending lower levels.
The ‘Max Pain’ level for Bank Nifty stands at 48,900, suggesting that a sharp decline could attract buyers and provide short-term support. However, any decisive breakdown below this level could lead to intensified selling pressure, according to SAMCO Securities’ analysis.
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