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Informist, Friday, May 29, 2026

By Gopika Balasubramanium

MUMBAI – The Nifty 50 options chain saw traders rapidly change positions on Friday to hedge against outflows in the cash market due to MSCI index rebalancing as the rejig took effect, three derivatives analysts said. While there were no rejig changes to large-cap stocks, the Nifty 50 index faced steep selling pressure due to large-scale outflows, analysts said. Options traders sold call options at strike prices above the spot price and relentlessly bought put options at strike prices below the spot price, indicating that market sentiment turned substantially bearish. Short-term trend in the market remains weak, analysts said. 

The Nifty 50 settled at 23547.75 points on Friday, down 359.40 points or 1.5% from Wednesday. The index saw waves of decline during the final hour of trade, falling around 2% intraday. Only five Nifty 50 stocks, primarily in the information technology sector, ended higher. This week, the index has fallen by 2%, and in May, it is down by 3%. In the near term, unless the index sustains above 23800 points in the spot market, selling pressure will persist, two derivatives analysts said. Further, the put-call ratio declined to 0.53 on Friday, after having remained around 1 or above for several sessions now. This indicates that the downside in the index cannot be ruled out, analysts said.

"MSCI rebalancing caused the last half-hour volatility," Ashish Sherigar, senior technical and derivatives analyst at NVS Brokerage, said. The Nifty 50 will take support at 23500 and below that, 23000 and 23200 have the highest put writers as per the options chain. These would be subsequent support levels, he added.

Traders aggressively exited positions they had built at various strike prices, with premiums on out-of-the-money contracts falling sharply. The bearish bets were primarily concentrated at strike prices such as 24000 call and 25000 call. Traders added 6-7 million short bets in these strike prices, indicating that they do not expect the index to move towards such levels anytime soon.

The premiums at immediate out-of-the-money strikes were sharply higher than those on contracts with strike prices far away from the spot. For instance, the premium on the 23700 call was INR 152.10, and on the 24700 call, it was INR 4.80. This indicates that the demand for strikes relatively near the spot is high, indicating that the Nifty 50 is likely to fall at every attempt to rise. 

At the 24000-strike call, the premium was INR 47.25, falling 64% during the day. The strike price also saw the largest increase in open interest and the highest concentration. That said, traders bought call contracts at extreme out-of-the-money strike prices above 25000, with open interest less than 400,000.  

Traders bought out-of-the-money put contracts expiring next week, across the board, with a rise in premium at almost all the strike prices. At 23700 put expiring Tuesday and Jun. 9, the premiums jumped 81-135%, indicating that there is a likelihood of the index reaching that level. Premiums at deep out-of-the-money puts at strikes such as 23100, 23200, and 23000 jumped 83-132%. At 23900 put, the premium was INR 123.8, and at 24000 put, the premium was INR 170.70. The highest addition of open interest was seen at the 23100-strike put. The maximum concentration of open interest was unchanged from Wednesday at the 23000 put.

--Nifty 50 June closed at 23740.00, down 256.70 points; 192.25-point discount to the spot index

--Nifty 50 July closed at 23840.00, down 249.60 points; 292.25-point premium to the spot index

--Nifty 50 August closed at 23955.20, down 251.70 points; 407.45-point premium to the spot index

HDFC Bank, Infosys, Coal India, Bharti Airtel, Reliance Industries, Multi Commodity Exchange of India, ICICI Bank, Federal Bank, and Wipro were the most actively traded underlying stocks on Friday. End

Edited by Saji George Titus

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