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Informist, Friday, Mar. 13, 2026

By Gopika Balasubramanium

MUMBAI – Traders sold out-of-the-money call options and bought put contracts above spot levels during Friday's session, evident from the Nifty 50's over 2% drop. This also indicates further fall in the index in the coming sessions, especially if there is no descalation of the military conflict in West Asia. During the week, the 50-stock index fell 5%, its worst fall on a weekly basis in four years. The sell-off was triggered by mounting concerns about supply constraints for crude oil globally and the consequent spike in crude oil prices. 

Market participants are worried about several repercussions of war in West Asia on the overall growth of the economy and Indian corporate entites. Analysts pointed out that the chokehold at the Strait of Hormuz not only causes a risk of shortage of oil and gas, but also brings supply chains of various industries to a standstill. There are also concerns about higher input costs due to elevated crude oil prices as well as rise in freight charges. 

There are also worries of a slowdown in capital expenditure by the government as it would focus on absorbing the shocks arising from the crude oil shortages and procuring crude oil at the present elevated prices. The government also stands to offer subsidies to various sectors, especially those that would take a direct hit due to the West Asia crisis such as fertilisers, oil marketing, gas distributors, and the like.

Shortage of liquefied petroleum gas and liquefied natural gas is seen as a concern for many sectors as this will hit their core operations. Sectors such as automobile, hospitality, and consumer will be hit if there is a severe supply shortage. This is because companies cannot replace the gases with other fuels immediately, as that would require change in machinery altogether, analysts said. 

Many experts are also concerned about a rise in inflation to 4.5-5.0% in the coming months due to higher import costs on account of increased crude oil prices. The continued closure of the Strait of Hormuz risks crude oil rising to $110–$150 per barrel in four to eight weeks, Nuvama Institutional Equities said in a report. The releasing of strategic reserves may provide near-term relief but may lead to future demand restocking, the brokerage said. For India, every $1 increase in crude oil raises the annual import bill by about $2 billion, some analysts had said.

Earlier this week, Nomura raised India's inflation forecast for 2026-27 (Apr-Mar) to 4.5% from 3.8%, alongside raising its estimate for India's current account deficit for FY27 to 1.6% GDP. The brokerage also reduced the GDP growth forecast for FY27 to 7% as the military conflict is expected to impact the industrial and services sector.

That said, earlier in the day, Fitch Ratings increased its forecasts for India's GDP growth over the next two financial years by 30 basis points each, even as the pace of economic expansion is seen slowing down from FY26. The rating agency projects India's GDP to grow 7.5% in the current financial year, 10 bps slower than the government's second advance estimate of 7.6%. Fitch then sees growth slowing to 6.7% in FY27 and further down to 6.5% in FY28. Earlier, Fitch had projected the economy growing 6.4% and 6.2% in FY27 and FY28, respectively. 

On Friday, the Nifty 50 closed at 23151.10 points, down 488.05 points or 2.1%. The 50-stock index is down over 13% from the all-time high the index had hit at the beginning of 2026. Further, the index has dropped 8% ever since the military conflict in West Asia began. Technical analysts expect the 50-stock index to find support at 23100-22900 points and face resistance at 23500-23700 points. 

Some analysts feel it would take quite some time for the Nifty 50 to climb back to record highs. Some heads of research earlier in the week had said that they would likely cut the 2026-end targets for the Nifty 50 if there are no signs of descalation in West Asia. There also expectations of downward revision of earnings estimates of crude and crude derivatives-linked sectors such as paint, tyre, ceramics, consumer, and textiles. 

Options traders exited far out-of-the-money call contracts at 24000-25000 strikes and their premiums fell 42-72%. This indicates heightened selling pressure at those levels and it is less likely that the Nifty 50 will recover to those levels in the near term. The highest concentration of call contracts as well as the maximum addition of open interest was at 25000.

Traders bought put contracts at strikes between 22000-22800, indicating expectations of the Nifty 50 to fall to such levels. At 22800 put, traders added nearly 2 million contracts and its open interest stood at 4.7 million. The highest concentration of open interest was at the 21500 put option and maximum addition of open interest was at the 22000 put option.               

--Nifty 50 March closed at 23288.40, down 488.05 points; 77.30-point premium to the spot index

--Nifty 50 April closed at 23370.50, down 511.90 points; 219.40-point premium to the spot index

--Nifty 50 May closed at 23522.00, down 500.10 points; 370.90-point premium to the spot index

HDFC Bank, Larsen & Toubro, ICICI Bank, Reliance Industries, State Bank of India, Vedanta, Hindalco Industries, National Aluminium Co., Tata Steel, Mahindra & Mahindra, Dixon Technologies (India), Tata Consultancy Services, Infosys, Coal India, BSE, Bharat Electronics, Bharti Airtel, and ABB India were the most actively traded underlying stocks Friday.  End

US$1 = INR 92.46

Edited by Avishek Dutta

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