Nifty 50 (23,548) lost 0.7 per cent over the past week, whereas Nifty Bank (54,239) managed to gain 0.3 per cent. While broader derivatives positioning shows some moderation in bearishness, institutional investors continue to maintain a cautious stance.

Foreign Institutional Investors (FIIs) remain net short on index futures, although the net short position declined 11 per cent over the last week to 2.01 lakh contracts. However, they increased net short positions on index call options by 67 per cent to 2.71 lakh contracts and raised net long positions in index puts by 17 per cent to 4.62 lakh contracts, indicating that institutional traders retain bearish inclination.

On the other hand, combined FII-retail positioning shows some improvement. Net short positions on index futures reduced from 63,328 contracts to 47,877 contracts and net short call options declined sharply from 2.36 lakh contracts to 1.26 lakh contracts. Additionally, net put shorts increased from 2.43 lakh contracts to 3.24 lakh contracts, suggesting that bearish conviction has softened at the broader market level.

That said, cumulative futures Open Interest (OI) declined during the rollover week, falling from 237 lakh contracts to 200 lakh contracts in Nifty and from 31.1 lakh contracts to 27.5 lakh contracts in Nifty Bank. Coupled with the fact that both indices continue to face key resistance levels, the derivatives data points to a market where bearishness is easing, but a decisive bullish breakout is still awaited.

Nifty 50

Nifty futures (Jun) opened with a gap-up last week and climbed to a high of 24,160 on Monday, triggering the stop-loss of 24,150 on our recommended short position.

While it attempted to stabilise above the key price band of 23,950-24,000 in the following sessions, the bears took over on Friday and dragged the contract sharply lower, leading to a weekly loss of 0.2 per cent.

As the June futures fell and its OI more than doubled over the last week to 187 lakh contracts, the contract seems to have experienced short build-up. However, the Put Call Ratio (PCR) of June options, despite moderating from the previous week, stood at 1.17 on Friday, indicating that put open interest continued to exceed call open interest, a relatively positive sign. Also, as mentioned above, at a broader level, the bearishness has eased a bit.

While this does not necessarily mean an imminent breakout of 24,000, the bears’ degree of dominance has softened and they need to stay more cautious.

Since the resistance at 24,000 holds, there is a good chance for Nifty futures (Jun) to see a decline, possibly to 23,500, a support. A breakdown below this can strengthen the bears, potentially opening the door for a deeper decline to 23,000. 

On the other hand, if the contract recovers, breaks out of 24,000 and sustains above it, we are likely to see a rally to 24,500. Resistance above 24,500 is at 24,800.

Strategy: Traders can consider initiating shorts if Nifty futures (Jun) rises to 23,925. Target and stop-loss can be 23,500 and 24,200, respectively.

Option traders can buy June expiry 23,500-put (₹299.45) if its premium declines to ₹240. Place stop-loss at ₹140 and book profits at ₹400.

Nifty Bank

Nifty Bank futures (Jun) began last week on the front foot. On Monday, it opened with a gap-up and climbed to a high of 55,805, triggering the stop-loss of 55,400 on our recommended short position.

However, the contract drifted lower in the subsequent sessions. Nevertheless, unlike Nifty futures, Nifty Bank futures managed to wrap up the week just above the support at 54,600. For the week, it gained 0.6 per cent.

The rise was accompanied by an 80 per cent increase in open interest to 26.3 lakh contracts, suggesting fresh long additions. While the Put Call Ratio (PCR) of June options remained at 0.94, indicating a mild bearish bias, the contract’s ability to hold above 54,600 and the addition of fresh long positions point to improving sentiment in Nifty Bank.

That said, Nifty Bank futures must decisively break above 55,800 to establish a sustainable rally. Such a breakout can lift the contract to 56,750 and subsequently to 57,500.

On the other hand, if the contract slips below the support at 54,600, it could resume the downswing towards 53,150, a key support. A breakdown below this level can strengthen the bearish case and potentially drag the contract to 51,800.

Strategy: Short Nifty Bank futures (Jun) if it breaches the support at 54,600. Place stop-loss at 55,300. Book profits at 53,200.

Option traders can buy June expiry 52,500-put if Nifty Bank futures breaks down below 54,600. The option can be bought at the prevailing premium and held so long as the futures contract trades below 55,300. Book profits when Nifty Bank futures approaches 53,200.

Published on May 30, 2026