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Informist, Wednesday, Sept. 16, 2026

 

By Eshitva Prakash

MUMBAI – Expensive contracts and high open interest on both sides of the options chain point towards volatility amid lack of conviction about the direction of market on Thursday. However, heavy writing activity across near-the-money strike prices lowers the possibility of a sharp rise or fall in the near term. Comments by the Federal Reserve Chair Kevin Warsh about the interest rate trajectory going forward will be the most important cue for market participants. 

 

While analysts and traders see an interest rate hike as a foregone conclusion, the fine print of the US Federal Open Market Committee's decision will provide cues on inflationary pressure. "I think the US Fed's rate hike decision is already priced (in), what matters now is whether (Kevin) Warsh signals a tighter monetary policy or calls this (hike) a one-off event," an analyst at a domestic brokerage said. Soaring Brent crude oil prices, a higher than expected rise in consumer prices, and strong jobs data make a convincing argument in favour of a rate hike, he said.

 

Deep-out-of-the-money call and put contracts faced selling pressure. Premiums of call contracts across 23800-2400 strike prices declined 20–30% and those on put contracts across 22500-23000 fell more than 30%. Contracts with a lower theta decay, expiring later than Tuesday, also saw low demand among buyers.

 

Higher delta options were also sold, but buyers managed to defend some near-the-money call contracts, indicating a slightly positive tone as some expect a continued recovery in the Nifty 50. Premiums of 23250 and 23300 strike prices rose over 7% and 5%, respectively. Further out-of-the-money call contracts were sold. 

 

Premiums on put contracts continue to be expensive despite a broad sell-off Wednesday. Premiums across 23200-23000 strike prices declined around 30?ch, but were priced at INR 69–INR 126.60. The highest put base at 23000 will act as immediate support for the 50-stock index, while the high open interest around 23500-24000 strike prices indicates increasing levels of resistance. 

 

On Wednesday, the Nifty 50 ended at 23217.60 points, up 0.4% from Tuesday. Fast-moving consumer goods companies bounced back after recent declines as higher earnings growth prospects due to a low base, and defensive purchases helped turn investor sentiment around. A rise in shares of financial services companies and banks also helped the headline index rise after two consecutive sessions of a decline. Meanwhile, information technology companies faced selling pressure as investors took profits after the rally on Tuesday. Crude- and crude-derivative sensitive sectors such as automobile and aviation were also under pressure.

 

At 1606 IST, the November futures contract of Brent Crude oil traded nearly 1% lower than Tuesday, but was still at $107.77 per barrel, sharply higher compared to the average trading price last month. Tuesday, the US 10-year Treasury yield touched 5.04%, its highest level since July 2007, as elevated oil prices continue to fuel inflation concerns.

 

Traders and analysts expect the US Federal Reserve to raise benchmark lending rates to rein in higher than expected growth in inflation. Currently, markets are pricing in an interest rate hike of 75 basis points by the apex bank by March as recent inflation caused by tariffs and energy supply shocks fuel the need for tighter monetary policy. However, the US Fed may need to signal a limited hiking cycle to avoid excessive tightening of financial conditions, Axis Capital said in a note. The brokerage said a 75-bps hike could unnecessarily weaken demand amid stagnation in inflation-adjusted income.

 

The Reserve Bank of India is likely to follow suit and revise its monetary policy stance, analysts said. The benchmark repo rate is likely to rise to 6.50% from 5.25% currently, Systematix Shares and Stocks (India) said in a note. Accelerating retail and wholesale inflation, persistent food and fuel price pressures, and a widening gap between producer costs and consumer prices will drive a rate hike cycle, the brokerage said, adding that rising US interest rates and global market uncertainty will also contribute to this hawkish decision.  End

 

US$1 = INR 95.96

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

 

Edited by Avishek Dutta

 

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