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Informist, Friday, Aug. 14, 2026

 

By Eshitva Prakash

 

MUMBAI – Heavy writing across put contracts of the Nifty 50's derivatives chain reflected the oversold position of the market. While the headline index tried to recover from lows multiple times Friday, they ended down for the fourth straight session. This selling of put contracts was, however, accompanied by a continued selling of call contracts, which shows low expectations of a sharp rise from current levels despite an oversold strucutre. While better-than-expected June quarter corporate earnings boosted the morale of traders, uncertainty in West Asia will continue to cloud derivative bets in the near term.

 

On Friday, the Nifty 50 index ended 0.1% lower at 24366 points. Tata Motors Passenger Vehicles was the worst hit constituent of the 50-stock index after the company's consolidated net profit declined over 80% on year and missed an already bleak view of the Street. Metal stocks continued to be sold for the second straight session, joining ranks with the decline in pharmaceutical stocks. The Nifty 50 cut some losses from the session's lows, led by consumer durables and consumer discretionary stocks. 

 

Trading during the session swung between purchases of near-the-money puts and calls as the headline index moved in a range throughout the session. Call options across 24400-24500 strike prices were in demand during the initial hours of trading, while premiums of puts across 24300-24350 strike prices increased when the market looked headed towards a decline. However, with both of these bets failing to change their moneyness, traders ultimately exited their positions, which, along with writing from institutional traders, led to a net decline in the premium of these contracts from Thursday. 

 

Open interest on call options at the 25000 strike price fell to nearly 12 million contracts, signalling traders unwound their long positions ahead of the weekend. Further, out-of-the-money calls were also sold relentlessly. On the put side, the highest open interest was at the 24000 strike price at over 11 million, followed by 24300 and 24200 strike prices, signifying the support zone for the Nifty 50. 

 

"The momentum indicator RSI (Relative Strength Index) has started to weaken further, with the bearish crossover slipping towards the oversold zone," Rupak De, senior technical analyst at LKP Securities said. Overall, sentiment remains weak, with the potential for a further fall towards 24180 points. On the higher end, 24400 will act as crucial resistance, De said. Some more consolidation is likely in the coming sessions and further weakness in the Nifty 50 from here could drag it down to the next lower support around 24200–24000 levels in the near term, Nagaraj Shetti, senior technical research analyst at HDFC Securities, said.

 

Despite a neutral to slightly negative view of the market in the near term, analysts said June quarter corporate earnings made valuations somewhat attractive for various sectors, which will provide support to the index in the medium to long term. Better-than-expected corporate earnings for the quarter, along with supportive domestic factors could drive upward revisions to earnings estimates for financial year 2026-27 (Apr-Mar) and continue to create opportunities for a bottom-up stock selection approach, Vinod Nair, head of research at Geojit Investments said. "Additionally, the stability in the rupee, moderation in India's 10-year bond yield, and a gradual improvement in FII (foreign institutional investors) participation are providing support to the domestic macro-environment and supporting the inflation trajectory," the analyst said. 

 

Traders purchased some low delta put options for hedging against a bullish risk. Premiums on some deep-out-of-the-money contracts rose significantly, albeit on very small margins. The implied volatility on these contracts was naturally quite high since traders pay higher implied volatility for out-of-the-money puts as these positions act as downside market insurance.

 

Option activity on the Nifty Bank index also reflected the uncertainty about where the market will end up. Call contracts across strike prices were sold heavily, with premiums across 58000-60000 strike price declining 20-30%. Some near-the-money put contracts remained in steady demand, with premiums across 57400-57300 strike prices rising slightly. 

 

--Nifty 50 August closed at 24450.00, 18.00 points; 84.00-point premium to the spot index
--Nifty 50 September closed at 24592.90, down 9.10 points; 226.90-point premium to the spot index
--Nifty 50 October closed at 24726.10, down 12.50 points; 360.10-point premium to the spot index

Bharti Airtel, Ashok Leyland, Bharat Dynamics, Vodafone Idea, Solar Industries India, Tata Motors Passenger Vehicles, Apollo Hospital, Jubilant Foodworks, ICICI Bank, and BSE were the most actively traded underlying stocks Friday.  End

 

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

 

Edited by Avishek Dutta

 

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