Is Open Interest actually useful for predicting NIFTY/Bank NIFTY direction, or are we overinterpreting OI data?
OI is useful, but I wouldn’t treat it as a standalone directional indicator. OI tells you where positions are building, not who will be right. For NIFTY/Bank NIFTY, the real edge comes from combining OI with price action, volume, option-chain shifts, and especially order flow/market profile.
For example, heavy call OI may look bearish, but if price keeps absorbing those offers and moving higher, that OI can actually become fuel for a breakout. So rather than asking “What does OI predict?”, I think the better question is “How is price reacting to the OI?”
Yeah, I feel OI is useful, but I wouldn’t rely on it alone. Once the OI change crosses a certain % or reaches a certain level, it can start having more impact. Otherwise, there’s a lot of noise. So I’d say it’s a good thing to keep an eye on, but not a key tool for predicting direction every time.