Derivative Market Analysis & Tomorrow’s Market Outlook

Derivative Market Analysis & Tomorrow’s Market Outlook  

Option Matrix India

Market Overview (Based on Derivative Data)

The derivative data for today presents a mixed but slightly bullish bias in market positioning, supported cautiously by the cash market inflows.

🔹 Client Activity

• Clients have added more long positions (total longs: 85,231 vs. shorts: 431,002), which may suggest hedging activity or a defensive posture.
• Major short positions in stock options (especially call short: -125,553) reflect a cautious stance on stock-specific rallies.

🔹 DII (Domestic Institutional Investors)

• DIIs are slightly negative in the derivative segment, especially with short positions in Index Calls (-3026).
• However, in the cash market, DIIs were net buyers at ₹1745.72 Cr, indicating a positive undertone for the broader market and a long-term accumulation strategy.

🔹 FII (Foreign Institutional Investors)

• FIIs have shown a bullish inclination, adding long positions in Index Futures (5851) and Index Options (Call Long: 125,722).
• FII cash market inflows were also positive at ₹135.98 Cr, although modest.
• Their short positions in Stock Options (Put Short: -16,062) suggest expectation of limited downside in certain stocks.

🔹 Proprietary Traders

• Pros are largely neutral to bearish, with notable stock future shorts (-19,452) and high exposure in both sides of the Index Options.
• However, their Put Short (Index & Stock) positions could indicate expectations of short-term support holding.

Summary of Long vs Short Data:

• Total Long Contracts: 6,84,360
• Total Short Contracts: 6,84,360
• % Long-wise Positioning: 23.11% (Pro), 29.76% (FII), 45.18% (Client)
• % Short-wise Positioning: 22.12% overall

This balance reflects a market in transition, possibly preparing for a breakout or reversal in the coming sessions.

Option Chain Sentiment

• Strong presence of Put Longs and Call Shorts suggests a range-bound to slightly bearish bias in options.
• However, the high number of Put Shorts by Pros and FIIs signals support around key levels, hinting at a buy-on-dip opportunity.

 Cash Market Support

• DII net buying of ₹1745.72 Cr is a strong indicator of institutional confidence, likely in large-cap or fundamentally strong stocks.
• FII inflow of ₹135.98 Cr, while smaller, adds to the positive undercurrent in sentiment.

Updated Support and Resistance Levels (As Nifty Trades at 25,001):

Tomorrow’s Market Prediction (27th May 2025):

With Nifty at 25,001 and both FIIs and DIIs showing buying interest, we expect:

• 📈 Bias: Mildly Bullish
• 🧭 Action Zone: 24,800–25,200
• ✅ Trade Setup:
  • Buy on dips near 24,800–24,850
  • Book profits around 25,150–25,200
  • If breaks 25,200, next target = 25,400