F&O Tracker: Bulls face a test

Nifty 50 (22,520) snapped an eight-week decline by gaining 0.4 per cent last week. Nifty Bank (55,257), after falling for six weeks consecutively, was up 1.5 per cent. However, it might be too early to call the recovery as a bullish trend reversal.

Below is an analysis. Nifty 50 Nifty (Oct) futures (22,613) gained 0.4 per cent last week. However, there was no significant change in outstanding open interest (OI), suggesting that traders largely retained their existing positions.

The OI of October futures stood at 190.7 lakh contracts on Friday compared with 191.6 lakh contracts at the end of the preceding week. The cumulative futures OI, too, remained largely unchanged at 218 lakh contracts on Friday against 219 lakh contracts a week earlier. The Put Call Ratio (PCR) of October options remained unchanged at 1.

However, the PCR of November options increased marginally from 0.9 to 1, indicating relatively higher put writing during the week. This suggests a slight moderation in bearish sentiment in the next month’s series. Overall, the derivatives data does not provide a clear directional signal, although there are signs of easing bearishness.

The chart, on the other hand, shows that the downtrend remains intact, with key resistance levels standing in the way of a bullish reversal. The nearest hurdle for Nifty futures is at 22,915, the 23.6 per cent Fibonacci retracement level of the recent downswing. The next resistance is at 23,120, where the 21-day moving average coincides.

Only a breakout above 23,120 can turn the near-term outlook positive. Such a move can trigger a rally to 23,300 and subsequently to 23,600. Alternatively, if October futures slips below the important support at 22,250, the downtrend can resume, potentially dragging the contract to 22,000.

The region between 21,800 and 22,000 is a notable support band. Overall, a breakout above 23,120 is necessary to signal a potential bullish reversal. Until then, the broader outlook remains weak.

Strategy: The direction of the next leg of the trend hinges on a breakout above 23,120 or a breakdown below 22,250. Therefore, we suggest traders stay on the sidelines for now. Nifty Bank Nifty Bank (Oct) futures (55,480) rallied 1.3 per cent last week.

However, the outstanding OI of this contract remained unchanged on a weekly basis at 23.6 lakh contracts. The cumulative OI witnessed a marginal decline from 25.9 lakh contracts to 25.5 lakh contracts during the week. While futures positioning does not provide a clear directional signal, the PCR of options offers some relief to the bulls.

The ratio of October options improved from 0.86 to 1, while that of November contracts rose from 0.40 to 0.63. This indicates relatively higher put writing compared to calls, a positive sign. However, the chart is yet to confirm a bullish trend reversal.

Nifty Bank (Oct) futures faces resistance at 55,600, followed by another hurdle at 56,000. The 21-day moving average and the 38.2 per cent Fibonacci retracement of the recent downtrend coincide at 56,000. Therefore, a breakout above this level is crucial for a trend reversal.

Comparatively, Nifty futures has some room to rise before encountering resistance, whereas Nifty Bank futures is already hovering near a significant hurdle. If the contract surpasses 56,000, it can advance to 57,000. The region between 57,000 and 57,250 is a resistance band.

Alternatively, if Nifty Bank (Oct) futures declines from the current level of 55,480, it can fall to the nearest support at 54,350. Subsequent support is at 54,000. Strategy: So long as Nifty Bank (Oct) futures trades within 54,350 and 56,000, the path of next price swing will remain uncertain.

Hence, traders can stay out until either of these levels are breached. Published on October 10, 2026