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The Day That Was:

Nifty Futures: 24,441.1 (-0.9%), Bank Nifty Futures: 55,166.0 (-1.1%).

Nifty Futures experienced a decline of 232.3 points. This was accompanied by a 3.3% increase in open interest, adding 5,87,925 shares and signalling a Short Build Up. In a similar trend, Bank Nifty Futures dropped by 591.6 points, with its open interest rising by 11.3%, or 3,19,130 shares, also indicating a Short Build Up. A notable divergence was observed in the premiums: Nifty's premium increased from 77 to 78 points, while Bank Nifty's premium decreased significantly from 236 to 161 points. Both the Nifty and Bank Nifty benchmarks fell, driven by multiple factors. President Trump's decision to halt further trade talks with India, along with lacklustre corporate earnings, dampened market sentiment. The market's reaction was a risk-off approach, with all sectoral indices on the NSE closing in the red. This decline was particularly pronounced in the realty, metal, and auto sectors. The Nifty Realty index fell 2.1%, continuing a four-day losing streak that resulted in a 2.9% total decline. Reflecting this heightened market uncertainty, the India VIX (a measure of expected volatility) jumped 2.95% to 12.03.

Global Movers:

US stocks rose on Friday, with the Nasdaq 100 gaining 0.9% to close at an all-time high, while the S&P 500 finished 0.8% higher at 6389. Sentiment continues to remain upbeat due to mostly better-than-expected earnings, but weakness in the labor market is making some investors worried about an economy that is slowing down. Elsewhere, President Trump's tariffs are seeing international equities outperform the S&P 500 by the most since 2022. Coming to the markets, the VIX dropped 8.6% to 15.2, the dollar index fell for the fifth time in six days while the US 10-year trsy yield inched higher toward 4.3%. In commodities, gold closed flat near $3400/ounce while oil prices were down for six straight days and settled around $66 on reports of a possible truce between Russia and Ukraine, with Trump set to meet President Putin on Aug 15.

Stock Futures:

LICI, Cummins India, PGEL, and Kalyan Jewellers have all seen a sharp increase in trading activity, with high volumes and significant price fluctuations. This suggests that investors are actively changing their positions in response to the companies' recent earnings reports and their outlook for the future.

LIC's stock witnessed a strong upward movement, buoyed by the company's robust Q1FY26 financial results, which saw a 5% YoY increase in both standalone net profit to Rs 10,987 Cr and net premium income. This strong performance, driven by steady growth in individual and group insurance, cemented LIC's dominant market position. The stock's positive momentum was reflected in its derivatives data, which indicated a Short Covering with a price gain of 3.3% and a 6.5% decrease in open interest, shedding 625 contracts to a new total of 8,975. The futures closed at a premium to the spot price of 3.6 points, a 1-point increase from the previous session's 2.6. Option positioning shows a bullish undertone, as total open interest in call options climbed to 6,670 contracts with 2,731 new additions, significantly outpacing the 786 new additions in put options, which stand at a total of 3,235 contracts. This data suggests that while short sellers are exiting their positions, option writers are actively building bullish positions at current levels, anticipating further price appreciation.

Cummins India's stock price rallied significantly, fueled by the company's strong Q1FY26 financial results. The company reported a substantial 40% YoY increase in standalone net profit and a healthy 26% YoY jump in total sales, surpassing analyst expectations. The stock's derivatives profile showed a Short Covering with a price gain of 3.3% and a 0.6% decrease in open interest, with 111 contracts shed from a total of 17,902. This movement was accompanied by a clear shift in option positioning towards a more bullish outlook, as evidenced by a decline in the Put-Call Ratio (PCR) to 0.82 from 0.97. Call option open interest rose to 6,320 contracts, a robust addition of 2,518 contracts, which dwarfed the 1,469 new additions in put options, bringing their total to 5,169. The PCR's decline alongside a significant influx of new call option contracts suggests a powerful surge in bullish sentiment among option traders.

PG Electroplast's stock price plummeted, hitting a 20% lower circuit, as a result of the company's disappointing Q1FY26 results and a sharply revised full-year guidance. The company's consolidated net profit saw a steep 20% YoY decline and a 54% sequential drop. This negative sentiment was further amplified by a Short Addition, where a price decrease of 20.5% was coupled with a 16.2% increase in open interest, adding 1,532 new contracts to reach a total of 10,968. Option positioning reveals a strong bearish bias, with a total open interest in call options at 11,187 contracts and put options at 4,978. The significant increase in call options (7,769 contracts) compared to put options (2,890 contracts) points to a massive short build-up, with option writers aggressively creating resistance at higher strike prices. The Put-Call Ratio (PCR) plummeted from 0.61 to 0.44, indicating a sharp increase in put writing, reflecting heightened fear and uncertainty. The combination of increased open interest and a declining PCR, along with a spike in implied volatility, confirms a strong bearish positional stance in the derivatives market, with traders anticipating further downside.

Kalyan Jewellers' stock suffered a significant 10.7% price drop, paradoxically occurring despite a strong Q1FY26 report showing a 49% surge in consolidated net profit and 31% revenue growth YoY. The decline was fueled by investor concerns over a contraction in India's gross margins and potential new US tariffs on Indian gems and jewellery. The stock’s derivatives activity confirmed a strong bearish turn, characterised by a Short Addition, where the price fall was accompanied by a 17.8% increase in open interest, adding 2,844 contracts to a total of 18,818. This bearish sentiment was mirrored in the options market, with total open interest in call options at 17,216 contracts and put options at 5,883. The substantial addition of 13,378 new call option contracts, compared to 3,437 new put option contracts, reflects a powerful short-term bearish positional stance from option writers, who are betting against any upward price movement. The Put-Call Ratio (PCR) decreased sharply from 0.64 to 0.34, underscoring a prevailing negative sentiment and an expectation of increased volatility ahead.

Put-Call Ratio Snapshot:

The Nifty put-call ratio (PCR) fell to 0.66 from 0.92 points, while the Bank Nifty PCR fell from 0.84 to 0.76 points.

Implied Volatility:

Suzlon Energy and PGEL have been highly volatile, which has led to their implied volatility (IV) reaching 100 each. While both companies still have high IV, Suzlon's is now at 47% and PGEL's is at 64%. This continued high IV indicates significant market concern, which has driven up the cost and risk of options trading. In contrast, Lodha and NTPC have the lowest IV in this group, and their implied volatilities at 30% and 17% respectively. This suggests a calmer market with less uncertainty, leading to lower options premiums and more stable prices. This environment is ideal for traders using simple directional strategies, like buying calls or puts. It is also attractive for experienced traders who sell options, as the reduced risk of major price swings helps limit potential losses.

Options volume and Open Interest highlights:

AU Bank and IEX Ltd are demonstrating strong upward trajectories, evidenced by their impressive 4:1 call-to-put volume ratios. These elevated ratios point to a highly bullish market sentiment, suggesting the potential for significant capital gains. However, this high level of trading activity may also indicate that options premiums are currently elevated, which would warrant caution before initiating new long positions. Conversely, Dixon Technologies and Adani Enterprises are experiencing considerable downward pressure, as indicated by their high put-to-call volume ratios. While this surge in bearish put activity could be interpreted as a potential oversold condition—offering contrarian investors a possible entry point—it also strongly reflects a prevailing negative market sentiment. Regarding options positioning, PG Electroplast and Kaynes Technology are experiencing a convergence of both call and put volumes, which portends substantial future price volatility. Fortis Healthcare, meanwhile, is showing a distinct bullish bias due to heightened call interest, while Delhivery is facing an increase in put activity, suggesting the market anticipates heightened volatility for both equities. (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 a divergent display of market sentiment, a total of 9,411 contracts in index futures saw a notable shift in positioning. Clients exhibited a bullish bias, adding 4,348 contracts. Conversely, Foreign Institutional Investors (FIIs) showed a significant bearish stance, decreasing their exposure by 9,411 contracts. Proprietary traders, meanwhile, cautiously increased their positions by 495 contracts. A similar pattern emerged in stock futures, with a total of 40,243 contracts changing hands. Here, clients demonstrated a strong optimistic outlook, accumulating 26,646 contracts. In stark contrast, FIIs aggressively reduced their positions by 39,669 contracts, signalling a bearish perspective. Proprietary traders also displayed a positive inclination, adding 13,597 contracts. This analysis of participant positioning underscores a clear split in market outlook, with retail clients and proprietary desks leaning towards a positive sentiment, while FIIs are actively unwinding their long positions, suggesting a cautious to bearish stance.

Nifty

Bank Nifty

Stocks with High IVR:

Stocks with Low IVR:

Stocks With High IVP:

Stocks With Low IVP:

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