Post Monthly Expiry Analysis

Post Monthly Expiry Analysis

Market Outlook for Tomorrow – | Option Matrix India

The markets wrapped up the May expiry on a strong note, with the Nifty closing at 24,833, reaffirming the bullish undertone that has been simmering under volatile sessions. Let’s dissect the data from both the derivatives and cash market perspectives to predict the road ahead for tomorrow.

🔸 Cash Market Snapshot

• DII Net Buy: ₹4,286.50 Cr
• FII Net Buy: ₹884.03 Cr

Institutional participation in today’s session was notably positive, with DIIs emerging as significant net buyers, supporting the market during the critical expiry session. FIIs, while moderate in magnitude, also remained net buyers, reflecting underlying confidence even amidst global uncertainties.

🔸 Derivatives Positioning

A closer look at participant-wise Open Interest data reveals some key takeaways:

🔹 Clients:

• Aggressively Long in Index Options:
  • Index Call Long: 18.87 lakh contracts
  • Index Put Long: 11.89 lakh contracts
• Moderate Index Futures Shorting: ~12.8k contracts
• % Wise Long OI: 45.87%

🟢 Interpretation: Retail and HNIs have positioned themselves bullishly, likely expecting a post-expiry breakout or upside continuation. Their high Put Longs suggest downside hedging or volatility play, but the bias remains bullish.

🔹 DIIs:

• Marginal futures short (31k contracts)
• Index Option activity minimal (likely using cash market for exposure)
• % Long OI: 1.94%, % Short OI: 30.90%

🔴 Interpretation: DIIs have stayed cautious in derivatives, despite buying heavily in cash. Their low derivatives exposure is typical and points to strategic cash-driven positioning rather than speculative leverage.

🔹 FIIs:

• Significant Index Option Shorting:
  • Index Call Short: 5.08 lakh
  • Index Put Short: 4.70 lakh
• Heavy Future Shorting in Stocks & Index (~29k contracts in Index, ~1.5L in Stocks)
• % Long OI: 33.63%, % Short OI: 21.72%

🟡 Interpretation: FIIs have shown a mixed stance. While their cash market buy figure of ₹884 Cr reflects confidence, their derivatives position—especially shorting of puts—indicates expectation of range-bound to bullish bias. They seem to be writing both sides, profiting from theta decay in a stable market.

🔹 Pros (Prop Desks):

• Substantial Put Shorting: 8.12 lakh contracts
• Index Call Long: 8.04 lakh contracts
• % Long OI: 18.56%

🟢 Interpretation: Prop desks have built short volatility positions, indicating expectations of consolidation with a bullish tilt. This aligns with technical and expiry-based patterns.

📊 Net Summary: Market Positioning

🔮 Prediction for Tomorrow (May 30, 2025)

Given the above data points, the market appears poised for a continuation of bullish momentum, especially post-expiry clean-up. Strong DII inflows and continued FII support (even if partial) provide a fundamental base.

Expectations:

• Bias: Bullish to range-bound with upward tilt
• Support Zone: 24,650–24,700 (Put writers may emerge)
• Resistance Zone: 24,950–25,050
• Volatility: Likely to cool off, favoring theta-based strategies

📌 Strategy Insight for Traders

• Bullish View: Consider bull call spreads or put shorting on dips
• Neutral View: Short straddles/strangles at ATM, monitor VIX
• Key Watch: FII futures positions and rollover trends in June series

Conclusion

Today’s expiry action sets the tone for June with a bullish undertone, supported by strong cash market inflows and a decline in aggressive shorting. Unless a macro surprise disrupts sentiment, the markets seem geared to scale new highs in the near term.

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