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Informist, Friday, Jul. 24, 2026

 

By Eshitva Prakash

 

MUMBAI – Traders added to short positions and continued selling call contracts across the Nifty 50 options chain, signalling expectations of further downside in the headline index. However, large open interest in multiple out-of-the-money put contracts suggests the Nifty 50 will find support near current spot levels. Consequently, traders expect only a limited fall.

 

A further rise in crude oil prices is likely to weigh on market sentiment and trigger a steeper decline in the Nifty 50, as indicated by positioning in deep-out-of-money put options, analysts said.

 

The 50-stock index fell below the lower end of its one-month-long consolidation range when markets opened Friday as elevated crude prices put severe pressure on the rupee. Market participants are closely watching the domestic currency for signs of more weakness, which could result in a sharper correction in the stock market, analysts said.

 

Analysts largely overlooked US tariff revisions since the new rate levied on India is just slightly lower than the previous effective rate. The US Thursday imposed a 10% tariff on imports from India, which replaces the 12.5% tariff originally proposed under Section 301 of the Trade Act of 1974. US Trade Representative Jamieson Greer said tariffs were aimed at addressing what Washington considers weak enforcement of forced labour restrictions by trading partners.

 

The Nifty 50 ended at 23767.45 points, down 102.15 points or 0.4% from Thursday. At 1602 IST, the September futures contract of Brent crude oil traded over 4% lower at $96.59 on the Intercontinental Exchange. Despite the decline, oil prices have risen more than 14% over the past six sessions. Information technology majors led the index's gains, buoyed by a sharp intrady decline in the rupee, which is favourable for export-oriented IT companies. A fall in shares of index heavyweights, automobile and oil marketing companies kept the Nifty 50 under pressure.

 

Throughout the session, traders purchased inexpensive, deep out-of-the-money put contracts as downside protection. Put contracts closer to the spot level were also in heavy demand, while call options were sold across strike prices. "Nifty (50) index is heading towards the support zone of 23600-23500 spot levels," Vipin Kumar, assistant vice president at Globe Capital Markets, said. He advised traders to adopt a sell-on-rise strategy as long as the Nifty 50 index remains below 23900. Kumar noted that the Nifty 50 breached its immediate support level of 23800 points. Only a rise above the 24000 level can push it back to 24260 points, he said.

 

Traders purchased put contracts across 23500-23600 strike prices, with premiums on these contracts rising sharply. There was also a sharp rise in open interest in put contracts within this range, indicating a support zone for the 50-stock index. Additionally, some traders also purchased further out-of-the-money put contracts across the 23300-23400 strike price, despite relatively higher implied volatility for these contracts.

 

Traders relentlessly sold call contracts across 24000–24500 strike prices, pushing premiums of these contracts 40–50% lower. Traders unwound their long positions, closing outstanding call contracts on the 25000 strike price. Open interest in the 24000 strike price rose by 1 million contracts to nearly 14 million, indicating strong resistance for the Nifty 50 at this level. 
 

Public sector undertakings Bharat Electronics and Coal India will release their June quarter earnings Monday. The options chain of the defence manufacturer indicates a rangebound movement. Traders covered their shorts on Bharat Electronics, but some also unwound their long positions. The options chain showed limited call buying and put writing near the spot level. The company's year-on-year revenue growth is expected to be slightly better in the June quarter than in the March quarter, but far from the growth seen in the September and December quarters. Its net profit is expected to rise 7% on year to INR 10.36 billion.

 

Derivative positioning in Coal India also indicates uncertainty about how the underlying shares will move. Some traders covered shorts, some purchased cheap call contracts, and some others unwound long positions. The rise in demand and sales of domestic coal to generate electricity, and a year-on-year rise in premium earned through e-auction prices are expected to prop up the company's revenue for the June quarter. However, lower production volumes due to a closure of its key mining block are expected to negatively affect the company's bottom line for the June quarter. The company is expected to report a 3% on-year decline in its consolidated net profit to INR 85.2 billion in the June quarter. The top line is expected to jump over 20% on year to INR 430.7 billion.

 

--Nifty 50 July closed at 23830.00, down 43.60 points; 62.55-point premium to the spot index

--Nifty 50 August closed at 23890.00, down 44.20 points; 122.55-point premium to the spot index

--Nifty 50 September closed at 24025.10, down 57.40 points; 257.65-point premium to the spot index

 

Infosys, HDFC Bank, ICICI Bank, Tata Consultancy Services, Reliance Industries, Axis Bank, Bajaj Finance, Wipro, TVS Motor Co., and State Bank of India were the most actively traded underlying stocks Friday.  End

 

US$1 = INR 96.56

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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