Nifty stuck in 400-point band, but May rollovers and open interest surge spark hopes for next leg of rally

Nifty Trend for Next Week

Nifty drifted through a lacklustre phase during the expiry week, trapped in a tight 400-point band, showing no real push in either direction. It closed the week (ended May 30) with a mild 0.41 percent loss, leaving traders puzzled as the market remains stuck in sideways churn without clear cues. But here’s the twist, despite the sleepy price action, May series rollover numbers flash a glimmer of hope for the bulls.

May’s rollover came in strong at 79.10 percent, nearly matching April’s 79.08 percent and marginally topping the three-month average of 78.06 percent. This solid rollover, paired with a higher rollover cost of 0.54 percent (Rs 133), signals that traders are still willing to pay up, suggesting confidence in the rally continuing, however, the mood leans cautiously optimistic rather than outright bullish.

Structurally, Nifty holds onto its Higher High–Higher Low pattern, showing bulls are quietly holding the line. The index has defended its key support zones, with aggressive buying seen on dips, and it remains comfortably above its 20-day EMA — all reinforcing the broader bullish undertone. Still, the price behaviour is hazy; the index needs a breakout beyond this narrow range to unlock momentum. Every intraday dip so far has been scooped up by buyers, hinting that long positions are quietly building underneath. As long as Nifty floats above the critical 24,500 zone and key moving averages, the bulls remain in charge.

On the momentum front, though, the daily RSI (Relative Strength Index) has tilted downward, now hovering below 60, suggests the strength is fading. The index has repeatedly failed to break above the stubborn 25,000–25,150 resistance, where Call writers have confidently stacked up. A decisive break above this zone is needed to trigger the next rally leg.

Open Interest (OI) Trends

With the June series kicking off, Nifty’s OI has jumped sharply to 1.50 crore shares, up from May’s 1.28 crore. This rise in OI, alongside stable prices, screams bullish build-up, as traders load up on fresh longs. While the new series kicks off on an upbeat note, the undercurrent of rising volatility keeps traders cautious, pointing to a bullish-to-range bound mood.

FPI Activity

Foreign Portfolio Investors (FPIs) entered May with a bearish stance, piling on shorts. The FPI long-short ratio started at 37.42 percent at the beginning of the series, rose further to 52.17 percent early, but plunged to 19.72 percent by month-end — indicating aggressive shorting. Yet despite this, the index hasn’t cracked, and with the long-short ratio now near oversold zones, short covering could soon flip institutional sentiment.

Options Data Insights

In the options space, the 25,000 and 25,500 Calls are witnessing heavy build up, marking stiff resistance zones. On the downside, the 24,500 Put holds the highest open interest, with 24,000 as a secondary safety net. A convincing move above 25,000 could trigger a short-covering rally, opening the gates to 25,500.

Outlook for the Week Ahead

Technically, Nifty has been consolidating inside the broad 24,650–25,050 range, showing classic signs of a consolidation phase amid high volatility. Yet, it closed above last month’s high, backed by a ‘three white soldiers’ pattern on higher timeframes and a firm hold above the 10-month EMA — both signals underlying momentum.

The 24,500–24,700 zone remains a sturdy floor, backed by moving averages and Put writing. Traders are best served sticking to a buy-on-dips approach while watching how the support-resistance tug-of-war plays out. A breakout above 25,150 could act as a slingshot, sending Nifty swiftly toward 25,500, setting up an exciting week ahead.