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Informist, Monday, Jul. 20, 2026

 

By Eshitva Prakash

 

MUMBAI – Traders wrote call and put options across the Nifty 50 options chain as a fall in select bank stocks dragged the headline index lower Monday. Traders also unwound long positions, leading to a sharp decline in premiums on out-of-the-money call options amid accelerated theta decay ahead of the weekly contracts' expiry on Tuesday. A heavy open-interest buildup near spot levels suggests the Nifty 50 is likely to remain range-bound, though fresh put buying in some bank stocks could exert further pressure on the index.

 

The Nifty 50 closed at 24238.50 points, down 95.80 points or 0.4% from Friday, with much of the headline index's movement dependent on heavyweights. HDFC Bank and Axis Bank's shares dropped over 5?ch after the former reported weaker-than-expected earnings, and the latter's net interest margin dropped sequentially in the June quarter. Traders had taken long positions on these banks on Friday, followed by a large long unwinding and put additions Monday. Kotak Mahindra Bank's shares also fell sharply. ICICI Bank was the only private bank to close higher after strong June-quarter earnings. Reliance Industries closed slightly lower despite higher-than-expected earnings growth.

 

"Despite a rise in crude oil prices in the recent sessions (and the) escalation of conflict in West Asia, the Nifty 50 has not corrected like it did in March," Rupak De, senior technical analyst at LKP Securities, said. "On technical charts, the Nifty 50 still looks poised for gains," he said. The analyst expects the weekly contract of the Nifty 50 to expire at 24400 points and end the month around 24800 points. Traders, however, sold call contracts and unwound long positions across 24500–25000 strike prices for contracts expiring Jul. 28 after purchasing contracts across these strikes Friday.              

 

Call contracts expiring across 24500-25000 were also sold relentlessly, with premiums dropping up to 87%. A drop in open interest in out-of-the-money call options across various strike prices also indicates that long positions were unwound. However, open interest at the 24200 strike price rose by over 1 million contracts to nearly 14 million, implying strong support for the 50-stock index. The next support level was formed at 24000 points, which has the second-highest open interest among put contracts. Deep-out-of-the-money contracts, however, were sold and traders covered their short positions, implying a limited downside for the Nifty 50 index. An implied volatility of around 13–14% suggests expectations of low volatility on Tuesday.

 

Traders unwound their long positions on the Nifty Bank index and also sold call options quite heavily during the session. However, it was accompanied by a large put writing on out-of-the-money contracts, implying a limited downside for the index. De said that the index is under pressure from new short positions on private lenders such as Axis Bank and HDFC Bank, but the strong performance of State Bank of India's shares is leading to limited put contract purchases for the sectoral index. Traders relentlessly sold call contracts on HDFC Bank, leading to premiums across the INR 800-INR 850 strike prices dropping to nearly half their value. Hefty put option purchases at INR 750 imply that the stock could drop by up to 4% from current levels. 

 

Traders purchased call options across 10600-11200 strike prices on the derivatives of Bajaj Auto. The company is expected to report a net profit of INR 27.89 billion, up 33% year-on-year, marking the sharpest increase since the June quarter of 2023. The company's revenue for the reporting quarter is estimated to grow 35% on year to INR 170.44 billion. 

 

--Nifty 50 July closed at 24269.00, down 52.70 points; 30.50-point premium to the spot index

--Nifty 50 August closed at 24364.00, down 39.00 points; 125.50-point premium to the spot index

--Nifty 50 September closed at 24499.50, down 40.80 points; 261.00 -point premium to the spot index

 

HDFC Bank, ICICI Bank, Axis Bank, Reliance Industries, State Bank of India, Punjab National Bank, Kotak Mahindra Bank, Infosys, Bajaj Finance, and Tata Consultancy Services were the most actively traded underlying stocks Monday.  End

 

Edited by Saji George Titus

 

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