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Informist, Tuesday, Aug. 18, 2026

 

By Eshitva Prakash

 

MUMBAI – Traders bought out-of-the-money put options on the derivative chain of the Nifty 50 Tuesday, signalling expectations of a further fall in the headline index. With the largest open interest build-up on the put side at the 24000 strike price and lower, market sentiment remains weak. Continued selling of call contracts across the options chain has built multiple hurdles for the Nifty 50 and shows limited likelihood of a sharp recovery from current levels.

 

Contrary to several analysts' expectations that the Nifty 50 would rebound from Monday's close, the index ended 0.6% lower at 24154.90 points on Tuesday. A rise in crude oil prices due to limited progress toward ending the US-Iran war was the biggest drag on market sentiment. Interest-rate and crude-oil-sensitive stocks led the decline, along with information technology stocks, which fell on profit-booking. 

 

The 50-stock index once again saw heavy selling in the final moments of the continuous trading session as traders reduced portfolios ahead of the closing auction session. The newly implemented system has led to significant divergence between the Nifty 50's closing levels at the end of the continuous trading and at the conclusion of the auction session. In just six minutes, from 1508 IST to 1514 IST, the Nifty 50 dropped 34 points. However, the Nifty 50 ended only slightly lower than its levels at 1515 IST.

 

"The put-call ratio for the next week's expiry is at 0.81, (which) indicates slightly negative sentiment among options traders," Vipin Kumar, assistant vice president of research at Globe Capital Market, said.

 

Out-of-the-money put contracts expiring on Aug. 25 were in steady demand, with premiums across 23900-24000 strike prices almost doubling. Premiums on further out-of-the-money put options with 23600-23800 strike prices rose sharply, but these low-delta options were purchased more for risk mitigation purposes than for their extrinsic value, analysts said. Deep-out-of-the-money put options remained unpopular with traders, with many exiting their positions far ahead of the expiry of these monthly contracts. 

 

On the other side of the derivatives chain, traders continued to sell call contracts for strike prices as high as 25000, which had the highest open interest among options contracts expiring Aug. 25. Tuesday, maximum call contracts were sold with 24200–24300 strikes, and some deep-out-of-the-money contracts also came under selling pressure. Other deep out-of-the-money call contracts were in demand, primarily as a hedging instrument. 

 

ICICI Securities recommended two positional futures trades. On Monday, the brokerage recommended selling the August futures contract of Multi Commodity Exchange of India within the INR 2,950-INR 2,960 range and set their target at INR 2,750 and stop loss at INR 3,055.10. However, with the stop loss triggered Tuesday, the brokerage recommended traders square off their positions. 

 

ICICI Securities said traders should buy Hindustan Aeronautics August futures at INR 5,035–INR 5,050 and target INR 5,400. They should put the stop-loss at INR 4,859 per share. Defence stocks have outperformed the broader market, and ICICI Securities expects Hindustan Aeronautics to continue leading the sector, the brokerage said, explaining its conviction. The August futures contract of the stock ended at INR 5,087 Tuesday. From an options perspective, the second-highest call base at INR 5,000 saw substantial unwinding, reducing resistance at higher levels. Further, put writing across both at-the-money and out-of-the-money strike prices indicates strong support and suggests that downside is likely to remain limited.

 

--Nifty 50 August closed at 24216.50, down 176.20 points; 61.60-point premium to the spot index
--Nifty 50 September closed at 24340.00, down 193.50 points; 185.10-point premium to the spot index
--Nifty 50 October closed at 24480.00, down 190.80 points; 325.10-point premium to the spot index

HDFC Bank, Bharti Airtel, ICICI Bank, Vodafone Idea, Reliance Industries, BSE, One 97 Communications, Kotak Mahindra Bank, Axis Bank, and Infosys were the most actively traded underlying stocks Tuesday.  End

 

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

 

Edited by Saji George Titus

 

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