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Informist, Wednesday, Aug. 19, 2026

 

By Eshitva Prakash

 

MUMBAI – A high build-up of open interest at 24000 strike price is likely to prevent the Nifty 50 from falling further as institutional put writers are likely to step in to protect their positions. Some analysts even expect a sharp rebound in the headline index as an oversold position can trigger some value buying. However, selling pressure is likely to emerge if the minutes of the US Federal Open Market Committee's meeting reveal concern about high inflation, and if the price of crude oil rises further. 

 

Wednesday, the Nifty 50 ended at 24078.30 points, down 76.60 points or 0.3% from Tuesday. Markets turned cautious ahead of the release of the minutes of the US FOMC meeting as traders anticipated hawkish comments. "The lack of a diplomatic resolution following the end of the US-Iran ceasefire kept crude oil prices and bond yields elevated, strengthening risk-off sentiment," Vinod Nair, head of research at Geojit Investments, said. The yield on the 30-year US Treasury climbed as high as 5.34% during trading, its highest level since 2007. The yield on the 10-year bond rose above 4.7%.

 

Market breadth was weak as the advance-decline ratio was skewed in favour of the bears at the session's close. A total of 343 out of the Nifty 500 stocks ended lower than Tuesday, signalling weakness across the market. However, information technology stocks outperformed the market as investors picked these stocks at relatively cheaper valuations. The decline Wednesday marks the seventh consecutive session of a fall for the 50-stock index, which, some analysts said, has pushed the Nifty 50 into an oversold zone. The put-call ratio for the current weekly expiry is around 0.7.

 

"I expect that the Nifty 50 will rally 350–400 points by next week," Rupak De, senior technical analyst at LKP Securities, said. The 24000-point level will act as a major support for the Nifty 50 and put writers will keep the index from falling below this level, he said, adding that there is trend-line support at this level on the technical charts. While put writing at this level was insiginficant, it accelerated during the second half of the session, pushing premiums on the contract off the intraday highs. The contract was valued at INR 70.10, down from INR 88.00 at its intraday peak. "...Weakness (in the market) exists, but the recent correction in the Nifty 50 has been quite slow, and therefore, I don't expect a big breakdown from these levels," De said. 

 

Put contracts across the derivatives chain were in heavy demand. Premiums of near-the-money put contracts across 23700–24000 strike prices rose 5–35%. The open interest at these contracts also increased around 1 million–3 million, indicating heavy institutional put writing. Moreover, while further out-of-the-money put contracts ended up more intrinsically valuable than Tuesday, their premiums were nowhere near their intraday peaks.

 

Call contracts continued to be sold on the other side of the derivatives chain. Premiums of call contracts with 24500 strike price declined over 50%. The contract also had the highest open interest among other option contracts at over 15 million. Open interest across nearer-the-money call contracts also rose and premiums declined, strengthening the argument that the Nifty 50's upside from current levels is likely to be limited.     

 

The Nifty Bank index ended flat compared to Tuesday at 57239.75 points. Options data showed a strong possibility of the index moving between 57000 and 58000 points in the near term. A decline in open interest at multiple out-of-the-money strike prices also indicates long unwinding and short covering.

 

--Nifty 50 August closed at 24108.90, down 121.20 points; 30.60-point premium to the spot index
--Nifty 50 September closed at 24230.00, down 129.90 points; 151.70-point premium to the spot index
--Nifty 50 October closed at 24380.80, down 114.10 points; 302.50-point premium to the spot index

HDFC Bank, Reliance Industries, ICICI Bank, Canara Bank, State Bank of India, Infosys, Bharti Airtel, Dixon Technologies (India), InterGlobe Aviation, and BSE were the most actively traded underlying stocks Wednesday.  End

 

Edited by Rajeev Pai

 

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