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Nifty Futures: 24,813.1(0.5%), Bank Nifty Futures: 54,373.6(0.6%).

Nifty Futures experienced a Long Build Up as it rose 121.3 points, with open interest increasing by 67,275 shares to 1,77,42,300, a 0.4% rise. In contrast, Bank Nifty Futures saw Short Covering, rising 334.2 points with a decrease in open interest by 71,995 shares, a 2.3% decrease, bringing the total to 31,25,955. The market's positive momentum was reflected in benchmark indices, which, despite a volatile session, recovered from early losses to end the day with solid gains. The day's trading was primarily driven by domestic factors, with optimism surrounding the ongoing two-day GST Council meeting and expectations of potential tax rate cuts, especially in the auto and consumer sectors, boosting market sentiment. This optimism led to a rally in auto and consumer stocks, while metal and pharma stocks emerged as the top sectoral gainers on hopes of improved profitability due to China's plan to reduce steel output. PSU banks also contributed positively to the rally. The IT sector, however, was a drag on the indices, falling on concerns over US manufacturing data. The Nifty futures premium decreased to 98 from 112 points, and the Bank Nifty premium decreased from 378 to 306 points. India VIX, a gauge of market volatility, fell 4.1% to 10.93. The rupee recovered 9 paise from its all-time low to close at 88.06 against the U.S. dollar, supported by positive equities, lower oil prices, and a weaker dollar index, even as trade tariff concerns persisted.

Global Movers:

US stocks rose yesterday as tech megacaps rebounded. The S&P 500 closed 0.5% higher at 6448, and the Nasdaq 100 gained 0.8%, bolstered also by job openings falling to the lowest in 10 months and supporting the case for a rate cut. Fed Governor Waller said that rates should be lowered this month and must be followed up with multiple cuts. In related markets, the VIX ended near 16, while the dollar index and the 10-year treasury yield fell slightly. Gold's surge to a new record continued as the metal rose for a seventh straight session, settling at $3559/ounce. Meanwhile, Brent dropped to $67/barrel as traders prepared for a production increase at this weekend's OPEC+ meeting.

Stock Futures:

Piramal Pharma, Tata Steel, Phoenix Mills, and Indus Towers saw sharp intraday swings and a surge in trading volumes yesterday, fueled by company-specific triggers and shifting market sentiment. The heightened activity reflected a renewed investor focus, with brisk price action signalling a shift in risk appetite as market conditions remain uncertain.

Piramal Pharma Ltd. (PPLPHARMA) surged by 7.5%, propelled by a new "Buy" rating from a domestic brokerage firm that also raised its target price and earnings per share estimates, overshadowing previous bearish trends. The ascent was marked by a "Long Addition," with futures open interest (OI) expanding by 18% to 5,047 contracts due to the addition of 770 new contracts. In the options market, the total call OI stands at 3,043 contracts against a put OI of 2,148 contracts, with a notable increase of 1,926 call contracts added, compared to 1,481 put contracts. This strong call option accumulation relative to put options suggests an aggressive bullish sentiment among market participants.

Tata Steel Ltd. (TATASTEEL) rallied impressively, registering its highest single-day price change for the year with a 6.2% gain, closing at a yearly high and leading the Nifty Metal index. This robust performance was fueled by China's "anti-involution" strategy to curb steel production, creating a favourable market backdrop. The stock's momentum was underpinned by a "Long Addition," as futures OI soared by 15.8% to a yearly high of 36,516 contracts, driven by the addition of 4,972 new contracts—the highest single-day addition in the last three series. Option positioning shows a total call OI of 15,247 contracts and a put OI of 18,488 contracts, with 4,249 call contracts and 9,826 put contracts added, pushing the Put-Call Ratio (PCR) from 0.79 to 1.21. The significant accumulation of put options alongside a rising PCR indicates a growing preference for hedging among some participants, even amidst a strong price rally.

Phoenix Mills Ltd. (PHOENIXLTD) retreated by 3.4% after a recent rally, sparked by a brokerage upgrade, but faltered as the market appeared unconvinced by the rationale, which cited strong operating performance and strategic acquisitions. This price decline was coupled with a "Short Addition," as futures OI expanded by 5% to 11,812 contracts with the addition of 566 new contracts. In the options arena, the total call OI is 3,571 contracts compared to 1,835 contracts for puts, with 720 call contracts added versus 146 put contracts. The disproportionate addition of call options amidst a price decline suggests some participants are either writing calls or betting on a reversal, positioning against the immediate bearish trend.

Indus Towers Ltd. (INDUSTOWER) plummeted to a 52-week low with a 1.6% decline, as the announcement of its strategic international expansion into African markets ignited investor apprehension over potential cash deployment away from dividends. The stock's descent was marked by a "Short Addition," with futures OI increasing by 10.9% to 54,169 contracts, driven by the addition of 5,326 new contracts. The futures closed at a premium to the spot price of 2.05 points, widening from 1.9 points. Options data shows a total call OI of 19,300 contracts and a put OI of 11,102 contracts, with a substantial addition of 8,285 call contracts compared to 4,005 put contracts. The significant accumulation of call options despite the price drop points toward a contrarian view, with some participants potentially writing calls to capitalise on the bearish trend or anticipating a future rebound.

Put-Call Ratio Snapshot:

The Nifty put-call ratio (PCR) rose to 1.21 from 0.94 points, while the Bank Nifty PCR rose from 0.86 to 0.93 points.

Implied Volatility:

State Bank of India and Bajaj Auto are currently experiencing heightened market uncertainty, as reflected in their elevated implied volatility (IV) rankings of 85% and 63%, respectively. Their absolute IV levels 16% for State Bank of India and 23% for Bajaj Auto indicate that options on these stocks are trading at a premium, pricing in the potential for significant price fluctuations. This elevated volatility signals increased risk for traders, as both stocks are more susceptible to sharp and unpredictable moves. In contrast, PFC and Wipro are navigating a more stable environment, with the lowest IV rankings among the group and realized volatilities of 24% and 22%, respectively. This relative calm suggests more consistent price behaviour, creating a favourable backdrop for straightforward directional strategies such as buying calls or puts. Additionally, the subdued volatility could present attractive opportunities for options sellers aiming to benefit from reduced premium levels and a lower likelihood of large market swings.

Options volume and Open Interest highlights:

Piramal Pharma and Muthoot Finance have attracted strong bullish interest, as indicated by their high call-to-put volume ratios of 5:1 and 6:1, respectively. This surge in call option buying reflects growing market confidence in further upside potential. However, the resulting rise in option premiums may discourage new long entries, as the cost of participation has increased. On the other hand, Mphasis and Persistent Systems are experiencing notable bearish sentiment, evident from elevated put-to-call ratios. This spike in put activity suggests widespread pessimism, potentially signaling that these stocks are approaching oversold conditions—an opportunity that may catch the attention of contrarian traders. Still, the prevailing negative bias calls for a cautious and disciplined approach. In CG Power and Sammaan Capital, a sharp rise in both call and put volumes points to increased trader engagement and expectations of significant price movement, though without a clear directional lean. This balanced positioning suggests that the market is bracing for volatility rather than betting on a specific trend. Lastly, the uptick in call option activity for Phoenix Mills and in put option volume for Piramal Pharma highlights a more refined market sentiment. These shifts may reflect short-term hedging or speculative plays, indicating potential for directional volatility in the near term—bullish for Phoenix Mills and possibly defensive or bearish for Piramal Pharma. (This data covers only stock options with at least 500 contracts traded on the day for both calls and puts).

Participant-wise Open Interest Net Activity:

In the index futures segment, a net decrease of 2,689 contracts was observed, driven by a significant reduction in positions by Foreign Institutional Investors (FIIs), who offloaded 2,371 contracts, and Proprietary traders, who reduced their exposure by 318 contracts. This was partially counterbalanced by a notable increase of 1,160 contracts from retail clients. Conversely, in stock futures, a total of 31,199 contracts changed hands, signaling a distinct divergence in market sentiment. This segment witnessed a substantial accumulation of long positions by both retail clients and Proprietary traders, who collectively added 19,486 and 11,713 contracts, respectively. In stark contrast, FIIs demonstrated a bearish outlook, aggressively decreasing their positions by a substantial 28,637 contracts.

Securities in Ban for Trade Date 04-September-2025: RBLBANK  

Nifty

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