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Informist, Monday, Sept. 28, 2026

 

By Eshitva Prakash

 

MUMBAI – Traders bought out-of-the-money put contracts despite a sizeable decline in the Nifty 50 index Monday, indicating expectations of further correction. However, a high open interest build-up at the 22800 strike price signals limited possibility of a sharp decline Tuesday. With the monthly contract of the Nifty 50 set to expire Tuesday, options positioning suggests high volatility. Elevated oil prices are expected to keep benchmark indices under pressure.

Put sellers built a large position at the 22800 strike price of the Nifty 50 index and open interest at the strike rose over 6 million contracts to more than 15 million. However, support weakened after open interest at this position declined from the day's highs once the headline index breached this level. The contract was priced at INR 67.70, sharply lower than its intraday high of INR 94.00 as some traders booked profits, while sellers rotated their strikes lower. However, compared to Friday, the premium on the contract exploded nearly 500%. 

 

This downward rotation was evident at out-of-the-money put contracts. Premiums at 22500-22700 strike prices rose 100–400% from Friday, but premiums on these contracts were well off their intraday highs. Deep-out-of-the-money contracts were also bought, pushing cheap premiums across 22300-22400 strike prices higher by up to 80%. A fall in open interest at multiple in-the-money strike prices indicates substantial long unwinding. 

 

A sharp jump in the India VIX--the market's fear gauge--shows traders were cautious about taking positions in the market. The index rose over 12% to end at 13.64 points. A higher VIX means contracts get more expensive, pushing up margin requirements. The Nifty September futures contract ended 1.6% lower, at a small premium to the spot index--at 22814.90 points. Open interest of the contract declined over 11% to 10.35 million.   

 

Traders relentlessly sold call options across strike prices, indicating limited expectations of a sharp rebound from current levels. The highest call base at 23000 strike price--with nearly 18 million contracts net added Tuesday--shows near-term resistance for the 50-stock index. Premiums on closer-to-the-money contracts across 22800-22900 strike prices declined up to 86%. The highest put base was at 22000 strike price, followed by 22800 strike price. Analysts said open interest at 22000 strike price rose Monday due to hedging interest ahead of monthly expiry. 

 

Going forward, the zone of 22900–22950 points will act as a crucial resistance area for the Nifty 50, Sudeep Shah, head of technical and derivatives research at SBI Securities, said. As long as the Nifty 50 trades below the 22950 mark, the prevailing bearish trend is likely to remain intact. In such a scenario, the index may continue its downward trajectory and test the 22650 level in the near term, followed by 22500 points, Shah said.

 

Monday, the Nifty 50 ended at 22780, down 1.6%. Only three stocks among Nifty 50 constituents ended higher. The US' rejection of a ceasefire proposal by Iran has increased concerns that the war in West Asia could last longer than initially expected, reducing the likelihood of a near-term diplomatic resolution and increasing the risk of prolonged supply-side disruptions and higher commodity prices. Rising US bond yields are narrowing the India-US yield spread, potentially leading to foreign fund outflows and keeping market sentiment cautious, Vinod Nair, head of research, Geojit Investments, said in a note.

 

--Nifty 50 September closed at 22814.90, down 371.80 points; 34.65-point premium to the spot index
--Nifty 50 October closed at 22918.90, down 344.70 points; 138.65-point premium to the spot index

--Nifty 50 November closed at 23021.00, down 356.10 points; 240.75-point premium to the spot index

 

HDFC Bank, Reliance Industries, ICICI Bank, Vodafone Idea, Axis Bank, Infsosys, Bharti Airtel, State Bank of India, Tata Consultancy Services, and Dixon Technologies (India) were the most actively traded underlying stocks Monday.  End

 

Edited by Avishek Dutta

 

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