Nifty 50 (23,367) lost 0.8 per cent over the past week, while Nifty Bank (54,496) managed to gain 0.5 per cent. However, the derivatives data suggest that the broader market sentiment has weakened, primarily due to a rise in bearish positioning by institutional investors.

FIIs (foreign institutional investors) increased their net short exposure on index futures by 33 per cent to 2.68 lakh contracts over the last week. They also raised net short positions on index call options by 2 per cent to 2.76 lakh contracts and increased net long positions in index puts by 15 per cent to 5.30 lakh contracts, indicating a stronger preference for downside protection.

The broader positioning, including retail participation, also turned weaker. Combined net short positions on index futures increased from 47,877 contracts to 59,258 contracts. Likewise, net short positions on call options expanded 51 per cent to 1.89 lakh contracts. At the same time, net put shorts declined 13 per cent to 2.81 lakh contracts, suggesting reduced willingness among traders to defend lower levels.

The derivatives data mirror the divergence seen in the indices. Nifty appears relatively weaker as traders have added fresh bearish positions, whereas Bank Nifty has managed to hold up better. That said, the latter is yet to exhibit signs of a sustained recovery. Overall, market positioning points to strengthening bearish sentiment, with Nifty carrying a greater degree of weakness than Bank Nifty.

Nifty 50

Nifty futures (June) (23,452) declined sharply on Monday and thereafter traded largely within a range for the rest of the week. The contract eventually ended the week with a loss of 1.3 per cent. Consequently, the short position that we had recommended at 23,925 was not triggered.

While Nifty June futures fell 1.3 per cent last week, its Open Interest (OI) increased 16 per cent to 199 lakh contracts, indicating fresh short build-up. Reinforcing the bearish bias, the Put Call Ratio (PCR) of June options declined from 1.17 to 1.03, as traders reduced put writing and added fresh call shorts.

Overall, the derivatives data point to a weakening outlook for Nifty futures.

That said, the chart shows that Nifty futures (June) are currently trapped within a range of 23,250-23,650. Given the prevailing derivatives positioning and the recent bearish trend, the probability of a breakdown below 23,250 appears higher.

A breach of 23,250 can trigger a decline to 23,000 and subsequently to 22,600. On the other hand, if Nifty futures break out of 23,650, they can witness a relief rally towards 23,850. A breakout above 23,850 can extend the upswing to 24,150.

Strategy: Go short on Nifty futures (June) if the contract breaks down below 23,250. Place stop-loss at 23,550 and book profits at 22,600.

Alternatively, if Nifty futures rise to 23,800, initiate fresh shorts with a stop-loss at 24,200. Book profits at 23,000.

Nifty Bank

Nifty Bank futures (June) (54,782), unlike Nifty futures, recovered strongly after witnessing a decline in the early part of last week. The contract recouped all the losses and eventually ended the week broadly flat.

The OI of June futures increased by a marginal 2 per cent to 25.72 lakh contracts. Likewise, thePCR of June options remained largely unchanged at 0.92. Therefore, the derivatives positioning does not offer any strong directional cues at the moment.

The chart shows that Nifty Bank futures, currently at 54,782, is trading within a broad range of 53,150-55,800. Hence, for reliable clues on the next leg of the trend, the contract must move out of this range.

A breakout above 55,800 can open the door for a rally to 56,750 and subsequently to 57,500. On the other hand, if the contract breaks below the support at 53,150, the sell-off can intensify, potentially dragging it to 51,800.

Strategy: Nifty Bank futures (June) made a low of 53,287.60 on June 3 before witnessing a sharp recovery. Consequently, the contract came close to our target of 53,200 before reversing sharply.

Traders can continue to hold the short position with the stop-loss and target retained at 55,300 and 53,200 respectively.

Published on June 6, 2026