The Nifty Futures is currently showing signs of a potential pullback after a period of weakness, supported by technical indicators and market profile analysis. Despite the larger downtrend on the monthly timeframe, the market has shown strong acceptance on the daily timeframe, suggesting a short-term bullish outlook.
Key Market Observations
1. Market Profile Structure: Dual Momentum Support Holding
The recent market profile structure indicates a strong support zone in the 22100-22175 range, marked by a Dual Momentum Bottom. This area has acted as a solid base, preventing further downside.
Additionally, the formation of an ORR (Open Rejection Reverse) pattern at the extreme bottom supports the possibility of a pullback.
What this means for traders:
As long as 22100-22175 holds, traders should consider a buy-on-dip strategy targeting 23000-23100 for this March series.
2. Institutional Activity: FIIs Still in Selling Mode
While the market has shown signs of short-term strength, foreign institutional investors (FIIs) have not significantly covered their shorts. There has been no major unwinding in index futures since February 10, 2025. This suggests that the larger players remain cautious and are not yet aggressively reversing their bearish bets.
What this means for traders:
Without FII short-covering, the rally could be limited. Traders should watch for any sudden increase in short covering, as it could fuel a stronger upside move.
3. Sentiment & Volatility: A Quiet Market Despite Uncertainty
Despite ongoing global uncertainty—particularly regarding Donald Trump’s policies—volatility remains low. The Turbo RSI (Daily Sentiment Indicator) has turned positive, indicating improving sentiment.
What this means for traders:
A low-volatility environment suggests that the market is stabilizing. If volatility picks up, it could lead to larger price swings, so traders should be prepared for potential sudden moves.
4. Top-Down Analysis: Mixed Trends Across Timeframes
- Monthly: Downtrend (Macro trend remains weak)
- Weekly: Balancing (2-week balance area)
- Daily: Uptrend with strong acceptance (Short-term bullish bias)
This mixed picture suggests that while longer-term risks remain, the short-term bias has shifted towards buyers.
5. Option Market & Open Interest: Cautious Optimism
The Max Pain level is currently at 22,500, aligning closely with the spot price. The Put-Call Ratio (PCR) at 1.02 suggests that put writers are more confident, indicating support at lower levels.
What this means for traders:
A high PCR can sometimes signal an overbought market, but in this case, it supports a bullish pullback scenario.
Final Thoughts
The market is at a critical juncture, showing short-term strength within a larger downtrend. While institutional traders haven’t aggressively reversed their bearish bets, the market profile structure suggests that buyers are stepping in at lower levels.
For now, the bias remains buy-on-dips, but traders should be cautious and watch for any major FII activity that could shift the trend.
