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Informist, Wednesday, Sept. 2, 2026

 

By Eshitva Prakash

 

MUMBAI – A surge in crude oil prices, expectations of tighter monetary policy, and a surge in bond yields across key global markets dealt a significant blow to bulls on Dalal Street. Tracking a decline in headline indices, traders loaded up on long puts and short call contracts across the Nifty 50 options chain, indicating expectations of further declines. Some value buying towards the end of the session lifted the 50-stock index off lows Tuesday, leading to relatively weaker writing of near-the-money long calls, which are expected to accelerate as theta decay increases.

 

Wednesday, the Nifty 50 index ended at 23914.45 points, down 0.6% from Tuesday and declining in line with major equity indices worldwide. A fresh exchange of missile attacks between the US and Iran dashed hopes of any swift resolution to the war in West Asia and raised concerns that energy prices could remain elevated, adding to inflationary pressures and expectations of higher benchmark lending rates. A sharp drop in shares of most automobile companies, due to expectations of weak growth in the second half of the current financial year, weighed on the index, while a rise in shares of select public-sector energy companies and some Adani Group companies prevented a steeper decline.

 

The September futures contract of Nifty 50 ended 95.50 points lower at 23994.80 points, closing at a premium of just 80.35 points to the spot index. October and November futures contracts of the headline index fell 87.10 and 104.80 points, respectively. The put-call ratio for contracts set to expire Tuesday hovered around 0.7.

 

Traders relentlessly bought out-of-the-money put contracts, sending premiums across 23600-23800 strike prices up about 30%. Deep-out-of-the-money put contracts were also in steady demand, with premiums across 23300-23550 rising 20-30%. Put contracts with further-away strike prices, marked for expiry later in the month, were also purchased. The highest put base at 23000 strike implies strong support for the Nifty 50 at that level, while hefty put writing at 23800 strike means the level will act as an immediate support for the headline index.

 

The other side of the options chain showed heavy writing and long unwinding activity. Premiums at out-of-the-money strike prices, which were already out of favour in previous expiries, were sold relentlessly. The premium at the 24000 strike fell nearly 40%, and at the 24200 strike, it declined almost 50%. A fall in open interest at several deep-out-of-the-money options showed traders unwound their long positions. The highest call base at 24200 indicates stiff resistance for the Nifty 50 at that level.

 

The US on Tuesday evening said it concluded its latest round of attacks on Iranian military targets, including air defence installations, radar systems and maritime assets, according to media reports. These attacks led to a spike in crude oil prices, with the November crude futures contract rising over 5% overnight. At 1515 IST, the contracts were at $94.80 per barrel on the Intercontinental Exchange. India is especially exposed to a spurt in crude oil prices as the third-largest importer of the commodity, meeting around 85–90% of its total oil requirements through imports. India's better-than-expected June quarter GDP figures bolstered investor sentiment, but high energy prices have muddled growth-inflation dynamics and kept the resulting enthusiasm in check, analysts said. 

 

Concern over bond yields hardening, particularly in the US, has also rattled sentiment in equity markets. The US 10-year bond yield reached as high as 4.81% so far Wednesday, its highest level since November 2023. Yield on Japan's 10-year government bonds crossed 3%, hitting the highest level in around 30 years. "The big threat is the rising bond yields in the US," V K Vijayakumar, chief investment strategist of Geojit Investments, said in a note. "The macro construct in the US indicates further hardening of the bond yields. If the 10-year yield touches 5%, it could trigger a significant correction in global equity markets," he warned. The analyst added that India's current account deficit of just 0.5% and adequate foreign exchange reserves make high oil prices more of a secondary concern, while hardening bond yields are a "macro indicator to watch closely."

 

--Nifty 50 September closed at 23994.80, down 95.50 points; 80.35-point premium to the spot index
--Nifty 50 October closed at 24102.20, down 87.10 points; 187.75-point premium to the spot index

--Nifty 50 November closed at 24208.00, down 104.80 points; 293.55-point premium to the spot index

Reliance Industries, BSE, HDFC Bank, Hero MotoCorp, State Bank of India, Coal India, ICICI Bank, Eicher Motors, Infosys, and Kalyan Jewellers India were the most actively traded underlying stocks Wednesday.  End

 

US$1 = INR 94.97

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

 

Edited by Saji George Titus

 

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