1. Recap – Relief Rally Ignites: Bulls Back in Charge
Nifty 50: The Nifty had a choppy start on 3 Sept but gathered steam as the day progressed. After opening around 24,620, it dipped briefly then rallied to close at 24,715.05 (up +135.45 points or +0.55%)[1], reclaiming the 24,700 level. The index ended near its intraday high (~24,737), indicating strong buying into the close. Bank Nifty also bounced back after the prior day’s slide, aided by banking gains (the Nifty PSU Bank index climbed +1.03% on the day[2]). Bank Nifty recouped losses to finish in the mid-54,000s range, reflecting renewed strength in financials.
Top Contributors: Heavyweight metal stocks led the charge – Tata Steel spiked 6% (the top gainer on both Nifty and Sensex)[3] on upbeat steel price outlook, while Hindalco and JSW Steel jumped ~3% each[4]. These metal majors provided a solid lift to the indices. Among autos and consumers, Titan and M&M rose over 1%[5] on hopes of GST tax cuts, and FMCG giant ITC also notched gains. Banking biggies HDFC Bank and ICICI Bank rebounded modestly (after dipping in the previous session[6]), lending support to Bank Nifty. In contrast, IT heavyweights underperformed – Infosys slid about 0.7%, dragging the Nifty IT index down by a similar margin[7], as weak US manufacturing data fueled concerns for Indian tech demand. Other defensives like Nestle and Hindustan Unilever also saw profit-taking[8]. Overall market breadth was firmly positive, with broad buying in midcaps and smallcaps (those indices up ~0.7–0.9%[9]). The top stocks to watch tomorrow include Tata Steel (momentum in metals), Hindalco, and banking leaders like HDFC Bank, while IT names (Infosys, TCS) warrant caution due to recent weakness.
Sector Snapshot: It was a sectorally broad rally. The Nifty Metal index skyrocketed +3.11% to lead all sectors[2], benefiting from global supply curbs and a weak dollar. Pharma gained +1.1%, and PSU Bank rose +1.03%[2] on value buying. Auto and consumer discretionary stocks were up ~0.7%[7] amid optimism around a GST rate cut on consumption goods. The sole notable laggard was IT, which fell ~0.7%[7] on U.S. demand worries. In the very short term, this sector rotation suggests a bullish tilt towards cyclicals (metals, autos) while defensive tech pauses. The market’s short-term trend remains upward, given the higher highs in Nifty and the strong breadth – even on a volatile day, multiple small-cap stocks hit fresh highs[10][11].
2. Range to Runway: From Box to Blast-off
Nifty Technicals: The Nifty’s chart is painting a largely bullish picture, but it’s approaching a critical zone. Technical analysts highlight 24,750–24,800 as a stiff resistance band – this was the region where the index faltered earlier[12]. In fact, Nifty turned down from ~24,756 on Tuesday. A decisive break above 24,800 on Thursday could trigger another leg up (possibly a swift move toward the psychological 25,000 mark). On the downside, Nifty has strong support around 24,450–24,500 – it has “once again found support” in that range this week[13]. If 24,450 gives way, the next support is around 24,350[13] (near last week’s lows). The index has essentially been consolidating in a ~300-point range (24,350–24,750), hinting at a potential breakout soon. Chart-wise, this could be seen as a flag pattern or triangle forming – a tight range after a run-up. A breakout above 24,800 would confirm an uptrend continuation, whereas a drop below 24,450 might extend a short-term correction.
Momentum oscillators are in favor of the bulls: the daily RSI is hovering above 60, indicating positive momentum but not extreme overbought levels. The MACD is in a mild bullish crossover, and rising volumes on up-days suggest accumulation. Notably, Wednesday’s rally came with robust derivative volumes ahead of expiry, reflecting strong participation. In summary, Nifty’s trend is up, but it is at an inflection point – watch that 24,800 barrier. A cautious sign is that the index closed just below resistance, so follow-through buying is needed to seize higher levels.
Bank Nifty Technicals: The Bank Nifty index is recovering but still under its recent highs. It faces immediate resistance around 54,150–54,200 (this was Tuesday’s high area). A push above 54,200 would indicate strength, potentially opening upside towards 55,000. However, bank stocks have been whipsawing, so confirmation is key. On the support side, 53,500 (approx. yesterday’s low) is the first cushion – interestingly, Bank Nifty closed near a swing low support ~53,480 on Tuesday[14], and held above it on Wednesday. Below 53,500, the next meaningful support is around 53,000, which is near the 200-day moving average and a key psychological mark[15]. Technical experts note that Bank Nifty is “near key supports” and caution that if 53,000–53,350 breaks, it could trigger further weakness[16]. For now, that zone has held, keeping the broader uptrend intact.
Momentum indicators on Bank Nifty are more muted: RSI is in the mid-50s (neutral after recent swings) and MACD is flat, reflecting the index’s consolidation. The index is trying to form a higher low around 53k – if that holds, it would be a positive sign. Chart pattern: Bank Nifty might be forming a base after a pullback; a range of roughly 53,000–54,500 has prevailed lately. A break above 54,500 would break the series of lower highs. Until then, expect range-bound action with stock-specific moves (PSU banks have shown relative strength, while some private banks lagged). Overall, the technical picture for both Nifty and Bank Nifty leans bullish but needs a clear breakout to gather momentum. Keep an eye on those support levels for any signs of weakness.
3. Fundamental & Global Cues
Domestic Fundamentals: On the home front, the market is riding on strong macro and policy cues. India’s Services PMI for August came in at a 15-year high, signaling robust economic momentum in the service sector[17]. This domestic resilience adds a fundamental backstop to the market. All eyes are on the ongoing GST Council meeting (Day 2 is on 4 Sept) – expectations are high that the Council may rationalize GST slabs or cut rates on certain products to stimulate consumption[18]. These hopes have already buoyed auto and consumer stocks[7]. Any announcement of tax relief (for example, a GST cut on two-wheelers or household goods) could further spur those sectors. However, there’s a flip side: if the outcomes disappoint (since “expectations are very high”[19]), we could see some “sell on news” profit booking. Apart from GST, there are no major earnings scheduled in this holiday-shortened week. Investors may track monthly auto sales figures (which trickled in earlier this week) and any government policy news. The monsoon progress and festive season demand trends are also in focus as we head into autumn – so far, consumer demand appears steady, aided by hopes of a festive boost.
Global Cues: Globally, cues are mixed but not overly negative. U.S. markets have been choppy this week amid concerns over growth and interest rates. On Tuesday, the Dow and S&P 500 fell about 0.6–0.7% on tech sector weakness and rising bond yields[20]. However, by Wednesday U.S. futures turned mildly positive (Nasdaq futures were up +0.7% early Wednesday)[21], helped by a relief rally in tech – notably, Alphabet jumped over 6% after a favorable court ruling[22], lifting Nasdaq sentiment. Investors are also eyeing upcoming U.S. jobs data and the Federal Reserve’s next moves. In fact, weaker U.S. labor market signals have bolstered bets that the Fed might cut rates sooner rather than later[23]. This speculation led to a rally in global bonds (yields cooling off slightly), which is generally positive for equities. European markets have been modestly upbeat (Stoxx Europe 600 index +0.8% on Wed morning)[21], aided by some easing in oil prices.
Commodities & Forex: Crude oil prices are a key watchpoint. Brent crude is hovering around the mid-$80s per barrel – recently off its highs after OPEC+ confirmed production cuts. Any further spike in oil (say towards $90+) could reignite inflation worries for India, so traders will monitor that. On the other hand, gold has been on a tear – it extended its record-breaking rally and is holding firmly above $3,500/oz[24]. The surge in gold (up nearly 0.4% Wednesday to $3,547) reflects a global flight to safety and expectations of eventual rate cuts, as well as geopolitical trade tensions[24]. Such a high gold price underscores some investor caution globally. Closer to home, the USD/INR has been relatively range-bound; the rupee traded near ₹88 per US dollar, slightly weaker but within its recent band. No major shake-up is expected unless the dollar index moves sharply. A stable rupee and high forex reserves continue to support India’s macro stability.
Upcoming Macro Triggers: For 4 Sept (Thursday), apart from the GST Council outcome, there aren’t big scheduled domestic events. Globally, U.S. weekly jobless claims data and any tidbits from Fed speakers could influence sentiment late in the day. Also worth noting: Friday (Sep 5) will see U.S. ISM Services PMI data – but that comes post-expiry. In Asia, Chinese economic data or policy announcements (if any) can sway commodity-linked stocks (especially metals). Overall, the fundamental backdrop is cautiously optimistic – strong domestic data versus lingering global uncertainties. The market will balance these cues, with an eye on overnight developments. Traders should especially keep watch on any overnight movement in Dow, Nasdaq, SGX Nifty, and crude oil before our opening bell.
4. Fear Hedged, Greed Active: The Positioning
Retail Trader Mood: Sentiment on the street remains fairly bullish, especially among retail traders. According to NSE’s participant-wise open interest data, the “Client” category (mainly retail and non-institutional traders) is net long in index futures – they held significantly more long contracts (over 216k) than shorts (85k) as of Wednesday【2†】. Retail folks have also been aggressive in the options market: they have been selling puts in high numbers, indicating a view that downsides will be limited. In fact, clients’ open positions show far more short puts than long puts, a bullish stance (short put sellers expect the market to stay strong or at least above certain levels). Retail also had a slight net short-call position by Wednesday (they wrote slightly more calls than they bought), which could simply be hedging or premium harvesting on the side. Overall, the retail crowd’s positioning suggests “buy on dips” confidence, which is evident in how quickly dips have been getting bought in recent sessions. The buoyant mood in smallcaps (many hitting 52-week highs[10][11]) also reflects risk appetite among retail investors. As long as this optimism persists, the market undertone should remain positive – though contrarians might note that excessive exuberance can be a short-term risk.
Institutional Activity (FII/DII flows): Institutional investors showed an interesting pattern on Sept 3. Foreign Institutional Investors (FIIs) were actually net sellers in equities for a third straight session – they sold ₹1,666.46 crore worth of Indian stocks net on Wednesday[25]. This profit-booking by FIIs comes after the recent run-up and ahead of the big event (GST meeting + F&O expiry). However, Domestic Institutional Investors (DIIs) more than picked up the slack – DIIs were net buyers of ₹2,495.33 crore on Wednesday[25], providing strong support to the market. In fact, DIIs (like mutual funds, insurers) have been consistently buying this month, offsetting FII outflows. This healthy FII–DII flow dynamic (local institutions stepping in when FIIs sell) has helped keep the market resilient. If FIIs resume buying, that would be an additional tailwind, but even now the liquidity from DIIs and retail is underpinning sentiment.
In the derivatives market, FIIs appear cautious: they have maintained a higher proportion of short positions in index futures. As of Wednesday, FIIs’ index futures longs were only about 17k contracts vs 200k shorts【2†】 – meaning they are net short (only ~8% of their index futures positions are longs). This heavy hedge by FIIs suggests they are guarding against downside (possibly hedging their equity portfolios or betting on some consolidation). They also hold a lot of index put options (over 519k long puts) relative to call options【2†】, and have written a substantial number of call options. This positioning indicates a bearish or hedged bias – essentially, FIIs seem to be bracing for potential volatility or negative surprises (classic “hedge your bets” approach ahead of an event). On the flip side, DIIs primarily operate via the cash market and stock futures – notably, DIIs hold large short positions in stock futures (likely hedging their long-term equity holdings). This means DIIs are bullish on cash equities but hedge through futures, a prudent strategy to lock in gains.
Proprietary & Market Makers: The “Pro” category (brokers’ proprietary desks and market makers) had very interesting activity. Pros significantly increased both long and short positions in index options on Wednesday – their call long OI and put long OI both shot up, and their call shorts and put shorts also rose【2†】. This suggests they might be running complex option strategies (possibly long straddles/strangles combined with short positions at farther strikes), effectively betting on higher volatility into expiry or just providing liquidity to the market. Proprietary desks are nearly neutral in net stance (their longs and shorts in options mostly offset), implying they are making the market and not taking a big directional bet. However, one notable thing is that pros were net buyers of options (both calls and puts) to a small extent, which implies they anticipate a sizable move (up or down) could happen – a typical volatility play ahead of expiry.
Option Chain Signals: The options data for the weekly expiry is sending some clear signals. The Put–Call Ratio (PCR) for Nifty’s near expiry is around 1.1, indicating slightly more open interest in puts than calls (a lot of puts are open)[26]. In isolation, a PCR >1 can mean the market is hedged to the downside (many puts bought) or that traders sold tons of puts (bullish). Given the context (retail selling puts), it’s likely a case of heavy put writing by bulls and also some put buying by cautious players – in essence, the market is well-hedged and expecting support to hold. The max pain point (the strike where option buyers feel most “pain” at expiry) appears to be in the 24,600–24,700 zone for Nifty. This is derived from the concentration of option OI: we’ve seen huge put OI built up at 24,600 and 24,500 strikes, and significant call OI around 24,800–25,000. That suggests that if the market expires near 24,600-700, the maximum number of both call and put options would expire worthless – which is often where the market gravitates on expiry day. This max pain at ~24650 aligns closely with Wednesday’s close, hinting that a big expiry-day deviation might not be in the interest of option writers. However, if an unexpected move comes (say a breakout above 24,800), it could force short-covering of calls and add fuel to the rally. Conversely, if Nifty slides below 24,500, put writers would feel the heat and could rush to cover (adding pressure on the downside).
Market Sentiment Summary: In summary, sentiment is cautiously optimistic. Retail and domestic players are optimistic and deploying funds, whereas FIIs are cautious and hedging. The presence of hedges (FII shorts, high put OI) could actually be contrarian bullish – because if no adverse event materializes, those hedges might unwind and add upward momentum. Fear gauges like India VIX remain relatively low (around 11-12), indicating complacency or calm. As long as no shock hits, the path of least resistance seems upward/sideways. But the market is also well-positioned to handle a shock if it comes (thanks to all those hedges). Traders’ mood can be summed up as “prepare for the worst, but expect the best.” With that in mind, let’s map out scenarios for the crucial expiry session tomorrow.
5. Scenario Planning for 4 Sept
Bullish Case: “Gap-up and Go” – In a bullish scenario, Nifty could break above the 24,750-24,800 resistance early and sustain there. A strong push (perhaps on the back of positive global cues or a favorable GST surprise) might trigger short-covering by trapped call writers. If 24,800 is taken out convincingly, the index can quickly sprint towards 24,900–25,000. We might see Bank Nifty climb past 54,500, lending further support. Catalysts: A bullish outcome from the GST Council (e.g., announcement of tax cuts or rationalization that cheers the market), overnight gains in Wall Street (say the Dow/Nasdaq closing strong), and continued DII buying can all fuel this rally. Additionally, many traders are hedged; if those hedges are unwound, it’s like adding fresh buying. Probability: Moderate, perhaps ~40%. The market trend is up, so an upside breakout is quite plausible if conditions are right. Self-critique: For this scenario to play out, we need genuine follow-through buying – mere hope won’t suffice. If Nifty opens strong but lacks breadth or volume, it could turn into a bull trap. One must also watch that 24,800 zone – a false breakout (pop above then drop back) would be a sign that bulls are struggling. So while the bullish case is on the table, it hinges on momentum overcoming a known supply zone.
Bearish Case: “Expiry Eve Shake-out” – In a bearish scenario, resistance holds firm and profit-booking sets in. Nifty might repeatedly fail to cross 24,750-24,800, and eventually sellers take control, pushing it down towards the supports. If 24,500 (Wednesday’s low area) breaks intraday, we could see an accelerated dip to 24,350 or even the 24,200s. On Bank Nifty, a break below 53,500 would likely bring 53,000 (200-DMA) into play[15]. Catalysts: This could happen if global mood sours – e.g., a spike in oil prices, a sharp fall in US futures overnight, or any negative surprise from the GST Council (or simply “no big announcements,” leading to “sell the news”). Also, since FIIs have been selling, any uptick in FII outflows or a rise in US bond yields could spook sentiment. Being an expiry day, sometimes inexplicable intraday swings occur as well. Probability: Lower, maybe ~20-25%. Without a fresh negative trigger, a big selloff is less likely given the domestic support and multiple cushions below. Self-critique: Even if we dip, the downside might be contained. There are “multiple supports” for Nifty on the way down (24,500, then 24,350)[27], and importantly a lot of investors are waiting to “buy the dip.” So the bear case would likely require a news shock or global risk-off. If it’s just mild profit-booking, Nifty could still defend 24,500. One should also recall that DIIs have been stepping in on every dip – that could limit the fall. In essence, while a downward drift is possible, a dramatic collapse looks less probable barring unforeseen bad news.
Neutral/Range-bound Case: “Pinning Around Max Pain” – Perhaps the most likely scenario for expiry: Nifty could remain range-bound, oscillating between roughly 24,500 and 24,800, and ultimately expire the day near that 24,600-24,700 region which is the options max pain point. We might see some intraday volatility – a mild push higher in the morning, a mid-day dip, and then a recovery – but essentially a sideways close as both bulls and bears close out positions. Catalysts: Often on expiry day, especially with no new triggers, markets gravitate to the point that causes maximum option burn. With many traders content to roll over or square off positions, there may be a tug-of-war that keeps indices within a predetermined range. The high put OI at 24,500 and call OI at 24,800 suggests neither side expects a break, and both will defend those levels. Also, if the GST Council news is a non-event or comes post-market, traders could just hold their horses. Probability: Fairly high, say ~35-40%. A neutral expiry (closing flat-ish) would not be surprising given the heavy option positioning. Self-critique: A “quiet expiry” doesn’t mean no action – in fact, intra-day swings can be sharp even if the end result is little change. One risk to this scenario is if a big player decides to gang up on option writers in the last hour, we could suddenly see a surge beyond the range (either a 3 PM short-covering rally or a quick dip). Also, sometimes an expiry that everyone expects to be calm can surprise. So even in a range scenario, day traders should be on guard for volatility pockets. The neutral case essentially assumes no news, balanced flows, and the market’s natural gravitation to equilibrium – which is common, but never guaranteed.
Our Verdict: After weighing the scenarios, the market appears biased towards a stable-to-positive expiry. The bullish and neutral cases combined have higher odds than a big bearish break. Unless adverse news hits, strong supports and domestic buying should keep the market buoyant. We might see Nifty ultimately expire near that 24,700 mark (±50 points), with an upward attempt not ruled out. It’s important to stay flexible – as the final hour on expiry day can often make or break the day’s move.
6. Trade Smart: Confirm, Commit, Control Risk
Pre-Market Checklist: Going into Thursday (expiry day), traders should prepare a quick checklist. (1) Check overnight developments – how did the Dow, S&P, and Nasdaq close? Any big moves in Asian markets early morning? Also see where Gift Nifty (SGX Nifty) is trading pre-open for an indication of our opening gap. (2) Look out for any news from the GST Council meeting (if there’s an early press release or leaks in the morning regarding tax changes – this could immediately impact sectors like auto, realty, FMCG). (3) Scan for any corporate news: results, rating changes or stock-specific developments (for example, late evening announcements or global news impacting certain stocks – e.g., if crude spiked, note oil marketing companies, if USDINR moved, note IT stocks, etc.). (4) Ensure you know your key levels (support/resistance as discussed) and have a game plan for each scenario. If you are an options trader, decide if you’ll roll over positions or exit at open – don’t get caught off guard by rapid decay on expiry morning. Basically, enter Thursday with a clear plan rather than reacting on the fly.
Intraday Levels & Strategy: For Nifty, the 24,750-24,800 zone is the immediate resistance ceiling – monitor how the index behaves if it nears this level. A breach could be a signal to go long for a quick scalp towards 24,900, but ensure confirmation (like sustaining above 24,800 for 15+ minutes). On the downside, 24,500 is the first line of defense; a dip to there that stabilizes could be a buying opportunity (with a tight stop just below). However, if 24,500 fails, be ready for a quick slide to 24,350 – one might consider light shorts there with strict stop-loss, or simply stay out until it settles. For Bank Nifty, the key pivot is around 54,000 – above 54k the bias is positive, below it turns cautious. Resistance is around 54,200-54,300; support at 53,500, then 53,000. Traders might employ a straddle/strangle in the morning if expecting volatility – but time decay will be rapid, so be wary. Another approach for expiry day is to focus on relative strength stocks – e.g., metals and select banks which showed strength may continue to outperform the indices. In contrast, IT stocks or others that lagged could be under pressure on any market dip. In terms of Bank Nifty expiry strategy (since Bank Nifty weekly options also expire Thursday), consider that PSU banks are strong – if Bank Nifty rallies, SBI, BoB, etc., could lead. If it falls, watch private banks like Kotak or HDFC Bank which could drag it. It might be wise to reduce leverage for intraday trades – expiry days can see sudden spikes in volatility. Keep stop-losses very handy and respect them, as whipsaws are common around noon and the last hour.
Risk Management (Expiry-Day): Expect some mid-day swings as traders roll over positions to the next week/month. Especially around 12:30–1:30 PM often we see random moves when Europe opens or when big players cut positions. Also, after 2:30 PM, be prepared for the “gamma” moves – option deltas start flipping fast, and if the index is near a big strike (like 24,700 or 24,800), there can be an intense battle. If you have profitable positions by late afternoon, consider booking profits rather than getting greedy in the last 30 minutes, unless you have a strong reason to hold. It’s better to close the day with a steady gain than let an expiry swing wipe it out. New traders especially might choose to stay on the sidelines in final minutes if things get erratic. There’s no shame in sitting out the chaos – remember, weekly expiries come every Thursday!
Finally, a calming perspective: no matter what happens on this single day, don’t overstress. As the saying goes, “The market will always create opportunities tomorrow — no need to stay up in suspense.” 🙂 Whether expiry day is wild or dull, the sun will rise again Friday with new trades to take. So stick to your plan, manage your risk, and get a good night’s sleep. The market’s not going anywhere – there’s always another chance around the corner. Good luck for tomorrow’s trading! [18]
[1] [3] [5] [7] [9] [21] [22] [24] Closing Bell: Sensex settles 410 pts higher after choppy trade, Nifty above 24,700; Tata Steel jumps 6%, Hindalco 3% – The Economic Times
[2] [4] [8] [10] [11] [17] [18] [19] Stock market highlights: Sensex ends 410 pts higher, Nifty at 24,715 on Day 1 of GST council meet | Markets News – Business Standard
[6] [12] [13] [14] [15] [16] [27] Bank Nifty Prediction Tomorrow, 3 September: Expert advises caution for Wednesday – Key levels, supports to watch – Markets | ET Now
[20] Markets News, Sep. 2, 2025: Stocks Close Lower as Tech Sector …
[23] Stocks, Bonds Rise as Weak Jobs Bolster Fed Bets: Markets Wrap
[25] FII & DII Trading Activity in Cash, Futures and Options, MF SEBI & FII SEBI Daily Trends Stocks Data