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The Day That Was:
Nifty Futures: 25,032.3 (-0.6%), Bank Nifty Futures: 56,415.6 (-1.0%).
Nifty Futures and Bank Nifty Futures ended the session with mixed to negative sentiment, shedding 142 points and 558 points respectively, amid heightened intraday volatility driven by weak domestic corporate earnings, persistent FII outflows, and a broader shift in global risk appetite away from emerging markets. Despite supportive global cues, Indian equity benchmarks posted modest losses for a second straight session, weighed down by weakness in banking, consumer durables, and pharma sectors, while Media, Metal, and IT stocks offered a partial offset. Investor caution intensified on concerns over sticky inflation, potential US Fed rate hikes, and renewed global trade tensions, including tariff discussions. The broader mood remained risk-averse as Indian equities marked a third consecutive weekly decline, pressured by disappointing Q1FY26 results from key Financial and IT companies. Market participants are now closely watching progress in US-India trade negotiations ahead of the 1st August deadline, following President Trump’s comment that a deal is near. On the derivatives front, the Nifty futures premium edged up to 64 from 63 points, while the Bank Nifty premium narrowed to 133 from 145 points, reflecting shifting sentiment. India VIX slipped marginally by 1.3% to 11.49, suggesting restrained volatility. In currency markets, the rupee closed at 86.16 per dollar, down 4 paise, after trading in a range of 85.97–86.23, pressured by foreign fund outflows and rising crude prices, though capped by underlying dollar weakness.

Global Movers:
US stocks closed flat on Friday as consumer sentiment improved, with the S&P ending higher for the third week in four. It hit a record earlier but finished about 0.1% down, the same as the Nasdaq 100. Meanwhile, Fed governor Waller suggested an interest rate cut at the July meeting, with the labor market showing signs of weakness. The focus will be back on tariffs, with the August 1st deadline less than two weeks away. In related markets, the VIX fell 0.6%, while the dollar index and the US 10-year treasury yield dropped 0.3% and 4 bps respectively. Elsewhere, gold rose 0.3% to $3350/ounce on the possibility of an immediate rate cut from the Fed while brent prices settled near $69 as hedge funds abandoned bullish bets.

Stock Futures:

On Friday, Dalmia Bharat, NMDC, Amber Enterprises, and BDL experienced a marked increase in market activity, characterised by significant rises in both trading volumes and price volatility. This surge indicates a clear shift in investor sentiment, with market participants actively adjusting their portfolios. Such repositioning appears to be driven by expectations of sector-specific triggers or forthcoming earnings announcements.

Dalmia Bharat Ltd. (DALBHARAT) surged to a new 52-week high in Friday's session, propelled by robust financial performance, including a striking 613% YoY increase in Profit After Tax (PAT) in Mar’25 results and a 30% QoQ revenue growth. The company's strategic expansion initiatives, highlighted by the recent commissioning of a 2.4 Mn tons grinding unit in Northeast India and an ambitious target of 130 MTPA total capacity, underscore its positive growth trajectory. This momentum was mirrored in the derivatives market, with Dalmia Bharat witnessing a Long Addition characterised by a 3.1% price gain and a 1.3% increase in open interest, pushing current futures open interest to 10,013 contracts with the addition of 131 new contracts. Option positioning reveals a total open interest of 3,111 contracts in call options against 1,244 in put options, with a significant addition of 699 call contracts compared to 140 put contracts. The Put-Call Ratio (PCR) further declined to 0.40 from 0.46, signalling a predominantly bullish sentiment among option buyers and writers who are betting on upward price momentum.

NMDC Ltd (NMDC) concluded Friday's session at its highest point of the month, underpinned by substantial trading volumes and robust operational performance. The company announced a formidable 31% YoY increase in its Q1FY26 iron ore production, achieving its highest-ever June volumes, which directly enhances its revenue potential. Furthermore, NMDC is strategically exploring critical mineral acquisitions overseas, signalling a forward-looking diversification and growth strategy. However, in the derivatives market, NMDC experienced significant Short Covering, evidenced by a 2.6% price gain and a 0.7% decrease in open interest. Current futures open interest stands at 20,428 contracts, reflecting a shedding of 135 contracts, equivalent to 18 lakh shares, marking the third consecutive session of unwinding in open positions. Within option positioning, total call option open interest is recorded at 10,431 contracts against 7,607 in put options. Notably, call options saw a massive decrease of 1,379 contracts, while put options registered a mere addition of 28 contracts, indicating that option writers are unwinding their bullish bets, and option buyers are likely becoming more cautious, leading to profit booking in existing long call positions or a reduced conviction for significant upward moves.

Amber Enterprises India Ltd. (AMBER) experienced a marginal 0.2% decline in its stock price, even as its board recently approved a resolution to raise up to Rs 2,500 Cr through permissible securities for expansion and financial strengthening. This slight price dip was accompanied by a significant surge in derivatives activity, indicating a Short Addition with an 11.5% increase in open interest. Futures open interest for Amber is now at a series high of 3,019 contracts, with 311 new contracts added, reflecting an almost 50% increase in open interest on a weekly basis, with negligible corresponding price movement, suggesting a build-up of short positions. The futures closed at a premium to the spot price of 7.5 points, a notable decrease of 25.5 points from the previous session's premium of 33, further hinting at reduced bullish conviction. Concurrently, the Put-Call Ratio (PCR) remained stable at 0.54, with total open interest in call options at 3,240 contracts and put options at 1,749 contracts. While 22 new call options were added, put options saw a smaller addition of 7 contracts, indicating that despite the overall stability in PCR, option writers are largely maintaining their call positions while a marginal increase in put writing suggests a tempered bullish outlook or hedging activity by option participants.

Bharat Dynamics Ltd (BDL) has experienced a notable downturn, with its stock price declining for seven consecutive sessions, culminating in a 10% weekly and 14% monthly loss. This mirrors a broader trend across the defence sector, including peers like HAL and Mazagon Dock, driven by profit-booking and the easing of geopolitical tensions. While the long-term outlook for BDL remains robust, short-term pressures may stem from concerns regarding the timely execution of various projects. In the derivatives market, BDL witnessed a Short Addition, characterised by a 4.1% price decrease and an 8.8% surge in open interest. Current futures open interest has reached a series high of 14,034 contracts, marking a significant single-day addition of 1,132 contracts, equivalent to 3.7 lakh shares—the largest such addition since the stock's F&O segment entry. Option positioning reveals a total open interest of 17,600 contracts in call options and 6,648 in put options. Call options saw a substantial increase of 3,509 contracts, dwarfing the 539 contracts added to put options. The Put-Call Ratio (PCR) further decreased from 0.43 to 0.38, indicating a strong bearish sentiment among option participants, as evidenced by the significant accumulation of call open interest, suggesting that option writers are aggressively betting on price declines while option buyers are hedging against further downside.

Put-Call Ratio Snapshot:

The Nifty put-call ratio (PCR) fell to 0.78 from 0.79 points, while the Bank Nifty PCR fell from 0.85 to 0.78 points.

Implied Volatility:

Piramal Pharma and Bosch Ltd have experienced notable stock fluctuations, with their implied volatility (IV) rankings at 98 and 91, reflecting high market uncertainty. Piramal Pharma's IV is at 40%, while Bosch Ltd's is 32%, prompting traders to adjust their risk management approaches. In contrast, Wipro and VBL hold the lowest IV rankings at 21% and 24%. Their steady prices and reduced volatility make them appealing choices for traders aiming for short-term profits during market volatility.

Options volume and Open Interest highlights:

ONGC and Dalmia Bharat show strong bullish signals, with call-to-put ratios of 5:1 and 6:1 respectively, suggesting optimism for short-term gains. However, these high ratios could also indicate overvaluation in the options market, so caution is advised before opening new long positions. In contrast, HDFC Bank and BDL exhibit signs of weakness, with higher put-to-call ratios and rising put volumes, pointing to investor worries about potential downside risks. While this hints at a bearish outlook, the increased put activity might also indicate oversold conditions, presenting contrarian trading opportunities for those expecting a reversal. Regarding market sentiment, BDL and Patanjali Foods show notable interest in both calls and puts, followed by Bosch Ltd on the call side and Trent Ltd on the put side. These option activity trends suggest strong expectations for price movement and potential support levels. Overall, these patterns signal rising market volatility, favouring strategies that capitalise on price fluctuations. (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 index futures, a total of 16,378 contracts witnessed changes, primarily driven by a significant 6,998 contract accumulation by clients and a robust 9,380 contract increase from proprietary traders. This bullish inclination from domestic participants sharply contrasts with Foreign Institutional Investors (FIIs), who demonstrably reduced their exposure by 12,317 contracts, indicating a cautious or even bearish outlook from this segment. Similarly, in stock futures, out of 38,931 contracts that changed hands, clients exhibited strong conviction with a substantial addition of 29,021 contracts, mirroring the optimistic stance of proprietary traders who augmented their positions by 9,910 contracts. Conversely, FIIs further decreased their stock future holdings by a notable 22,071 contracts. These figures collectively suggest a prevailing bullish bias from retail and proprietary traders across both index and stock futures, while FIIs consistently demonstrate a risk-off or bearish disposition.

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