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Informist, Wednesday, Jul. 29, 2026

 

By Eshitva Prakash

 

MUMBAI – Traders reduced long exposure on Nifty 50 options after three members of the US Federal Open Market Committee voted to raise the benchmark lending rates. A spike in crude oil price after the US renewed strikes on Iran also weighed on sentiment. However, they also bought near out-of-the-money call options, which, when seen together with continued selling of long puts across the options chain, indicates a slightly positive bias in the market. Despite some traders selling deep-out-of-the-money call contracts, premiums across these strike prices and implied volatility remain high.

 

The US FOMC left the federal funds target range unchanged at 3.50-3.75% at its July meeting when markets were pricing in a roughly 30% chance of a rate hike. After three members of the committee dissented in favour of a rate hike, over 65% of Fed funds futures traders now expect an interest rate hike in September, data from CME showed. "In the absence of explicit forward guidance (from US Federal Reserve Chair Kevin Warsh), markets are left reading the tea leaves of the dissenting votes for clues about the Fed's next move," David Kohl, chief economist, and Afonso Borges, fixed income research, at Julius Baer said in a note.

 

The war between the US and Iran, which seemed to be headed towards another ceasefire less than a week ago, has now escalated and affected several countries in West Asia. Cairo confirmed that a fire that broke out on two vessels at an Egyptian port Wednesday was caused by a drone. On the same day, Saudi Arabia attacked Iranian proxies in Iraq after months of steering clear from the war, according to media reports. The US military Wednesday launched a flurry of strikes against Iran as retaliation for Iran's strikes on Tuesday.

 

Thursday, the Nifty 50 ended at 24317.15 points, up 66.95 points or 0.3%. Automobile stocks ended higher, buoyed by a stronger-than-expected net profit figure from Mahindra & Mahindra and Eicher Motors. Rate-sensitive stocks such as banks and financial services companies ended lower after the US Federal Reserve kept its policy rates unchanged. "Put writing was seen at multiple strikes along with some call addition at OTM (out-of-the-money) strikes," Vipin Kumar, assistant vice-president of research at Globe Capital Market, said. He added that the put-call ratio at 1.26 indicates a slightly positive bias. He sees the headline index finding support at 24130 points and facing resistance around 24400-24530 spot level.
 

Some traders sold deep-out-of-the-money call contracts, pushing premiums across the 24500-24700 strike prices slightly lower. Premiums across further out-of-the-money call contracts fell more, but these contracts have a relatively lower delta. Meanwhile, traders bought near out-of-the-money call contracts at 24350-24450 strike prices, with premiums across these contracts rising sharply in the last few minutes of trading. 

 

Traders continue to write put options across strike prices. Premiums on out-of-the-money put options across 24200-24000 strike prices declined sharply. Further out-of-the-money put options were also sold. Options data suggest some traders unwound their long positions as open interest at in-the-money call options declined as the session progressed.

 

--Nifty 50 August closed at 24355.00, up 43.50 points; 37.85-point premium to the spot index
--Nifty 50 September closed at 24472.00, up 40.90 points; 154.85-point premium to the spot index
--Nifty 50 October closed at 24615.00, up 48.20 points; 297.85-point premium to the spot index

 

Mahindra & Mahindra, Infosys, Reliance Industries, Tata Consultancy Services, Bajaj Finance, Waaree Energies, HDFC Bank, Eicher Motors, Wipro, and Swiggy were the most actively traded underlying stocks.  End

 

Edited by Rajeev Pai

 

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