FIIs Kick Off March F&O Series with Short Positions in Nifty and Bank Nifty Futures

Foreign Institutional Investors (FIIs) have entered the March series with a bearish outlook, as indicated by the National Stock Exchange's (NSE) futures and options data. It appears that FIIs have carried forward their short positions from the February series into March.

The data reveals that the FIIs’ long-to-short ratio in index futures currently stands at 0.19, meaning they hold more than five short positions for every long position. This bearish stance has been in place since the beginning of the January series, when the Nifty was around the 23,800 mark, Bank Nifty hovered near 51,300, and MidCap Nifty was at approximately 12,800. Since then, these three major index futures on the NSE have declined by 5.3%, 5%, and 13.6%, respectively.

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Compared to the February series, FIIs have increased their open interest in index futures by 12.5%, with a notable concentration in Bank Nifty futures.

During the February series, Nifty recorded a 3% decline, while Bank Nifty and MidCap Nifty dropped by 1.1% and 6.3%, respectively.

From a technical standpoint, Thursday’s trading activity on Nifty’s daily chart reflects uncertainty. However, the index managed to hold above the 22,500 support level. As long as this level remains intact, a rebound towards 22,700–22,800 is possible. Conversely, a decisive break below 22,500 could lead to further declines towards 22,300–22,100, according to Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates.

How Are Other Key Market Participants Positioned?

Unlike FIIs, other major market participants—including domestic institutional investors (DIIs), retail investors, and proprietary traders—are taking a more bullish stance on index futures. Among them, retail investors are the most optimistic, with a long-short ratio of 2.7, meaning they hold over five long positions for every two short ones. This ratio has been around 2.5 since mid-January 2025.

DIIs, on the other hand, have a long-short ratio of 1.5, while proprietary traders are positioned at 1.3.

Nifty & Bank Nifty Options Trends

Options data for Nifty continues to suggest a bearish inclination, as CALL writers maintain dominance over PUT sellers, reflecting a cautious market sentiment. A substantial accumulation of open interest at the 23,000-strike CALL suggests strong resistance at this level, whereas significant PUT positioning at the 22,500-strike indicates a solid support zone, noted Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities.

The 22,600–23,000 range remains under pressure due to heavy CALL writing, while increasing PUT activity at lower levels points to an ongoing battle between bulls and bears, underscoring the market's fragile state. The Put-Call Ratio (PCR) has risen to 0.78 from 0.63, signaling a slight improvement in sentiment, though sellers continue to dominate despite occasional buying attempts, the analyst explained.

Similarly, Bank Nifty options data also leans bearish. A rise in open interest at the 49,000-strike CALL establishes this level as a strong resistance, whereas notable PUT writing at the 48,000-strike indicates buyers defending lower levels.

The 'Max Pain' level at 48,900 suggests that any sharp dip might attract buyers, providing short-term support. However, a clear breakdown below this level could accelerate selling pressure, according to SAMCO Securities' analysis.