29 September F&O Expiry: Amid Heavy FII Selling, Which Signals Is the Market Watching?
On Monday, 28 September, sharp selling was seen in the stock market. Nifty 50 slipped about 1.56% and closed at 22,780.25, and Sensex fell 1,124 points to come at 72,771.72. Now investors' eyes are on Tuesday's, 29 September, monthly F&O expiry. This week there are only four trading sessions, because on 2 October, on Gandhi Jayanti, NSE and BSE will remain closed. For this very reason, the expiry day has become even more important this time.
What happened in the market today?
The selling was not limited only to big stocks. Only 3 stocks of Nifty 50 rose and 47 fell. In Nifty 500, 76 stocks climbed while 424 fell. Bank Nifty fell about 2% to come at 54,471.65, midcap broke 1.63% and smallcap 1.85%. India VIX, considered the measure of fear, climbed 12.5% and reached 13.69. Nifty came to its lowest level since April.
Behind this, the main reason was crude oil's rise in price. Due to the deadlock in the US-Iran peace talks, worry about supply from the Strait of Hormuz returned, and Brent crude reached about 106.7 dollars per barrel. India is a big oil importer, so its effect is seen directly on the market.
Movement of FII and DII
According to provisional data, FIIs sold shares worth ₹5,353.22 crore, while DIIs made purchases of ₹5,189.02 crore. That is, domestic institutions absorbed about 97% of the foreign selling. On Friday, FIIs had sold ₹3,693.93 crore and DIIs had bought ₹2,838.17 crore. FII selling is continuously increasing, but DII support is saving the market from a deeper decline. These figures are provisional and may change later.
Which sector saw more decline and which saw less?
- Highest decline: Nifty PSU Bank saw a decline of 3.24%. Realty and Energy were also among the weakest sectors.
- Lowest decline: Nifty IT slipped only 0.26%. OFSS, Infosys and LTM were the top gainers of IT.
- Not even one of the 10 major sector indices closed in green.
Important levels of Nifty and Sensex (for 29 September)
| Level | Nifty 50 | Sensex (estimated) |
|---|---|---|
| R3 | 23,200–23,450 | 74,100–74,900 |
| R2 | 23,000–23,120 | 73,500–73,850 |
| R1 | 22,900–22,950 | 73,150–73,300 |
| Closing level | 22,780.25 | 72,771.72 |
| S1 | 22,760–22,780 | 72,700–72,750 |
| S2 | 22,650 | 72,350 |
| S3 | 22,500 | 71,900 |
Nifty's levels are based on the levels stated by 5paisa and SBI Securities (Sudeep Shah). Sensex's levels are an estimate derived in proportion to Nifty's levels and are not official figures of any brokerage. According to 5paisa, below this there is a big daily support around 22,222.
Impact of F&O expiry
On 29 September is the monthly expiry of Nifty, Bank Nifty and stock derivatives. On this day traders close positions or roll over into next month's contracts. Because of this, sharp ups and downs can come around strikes with large Open Interest (OI). Keeping an eye on these signals will be useful:
- Open Interest: If OI decreases along with price, it can be a sign of short covering or long liquidation.
- Put-Call Ratio (PCR): A sudden change shows a change in positioning, but alone it does not decide direction.
- India VIX: A rise in VIX means an increase in apprehension of risk.
- Rollover: See how much OI is going from the old contract to the new one.
- Volume: A breakout or breakdown that happens with strong volume is considered more reliable.
- FII-DII activity: See the positioning of cash and futures together; a single figure is not enough.
For example, if Nifty holds above resistance with volume and OI decreases, a short-covering rally can form. If both price and OI fall below support, the pressure of long liquidation can increase. In a range-bound market, repeated reversals may also be seen. These are only hypothetical scenarios, not predictions. Near expiry, the effect of gamma in ATM options can also bring sharp price changes.
Risk before the holiday
On Friday, 2 October, the domestic market will remain closed, but crude oil, currency and global markets will keep running. Those holding positions on Thursday will have to keep in mind overnight risk until the next session.
What will remain important ahead?
The market's direction now rests on crude oil, the US-Iran talks and FII selling. The RBI's monetary policy decision is due on 7 October. TCS will begin the Q2 season on 8 October with its results.
Conclusion
Amid heavy FII selling, expensive crude oil and weak market breadth, expiry day may remain volatile. No single indicator gives the full picture. It is necessary to see live OI, VIX, volume and price action together.
Sources: NSE (provisional FII/DII data, via StockEdge and NewsBytes)
disclaimber: This information is only for information, not advice to buy or sell. Due to leverage in F&O, the risk of loss is higher.
