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The Day That Was:

Nifty Futures: 25,127.6 (0.4%), Bank Nifty Futures: 56,981.8 (1.0%).

Nifty Futures closed 95 points higher, while Bank Nifty Futures registered a substantial gain of 566 points, recovering from earlier weakness. Domestic equity benchmarks concluded the day with minor gains, breaking a two-day losing streak, primarily driven by robust Q1FY26 earnings from heavyweights HDFC Bank and ICICI Bank. However, gains were partially offset by a decline in Reliance Industries due to softness in its oil-to-chemicals and retail segments, despite its strong Q1FY26 earnings. Sectorally, Financial Services, Private Bank, and Bank shares advanced, whereas Oil & Gas, PSU Bank, and FMCG shares declined. The India VIX, a key volatility gauge, fell 1.7% to 11.20. Nifty futures premium decreased from 64 to 37 points, and Bank Nifty premium narrowed significantly from 133 to 29 points, indicating a shift in derivatives positioning.

Global Movers:

US equities closed at record highs ahead of big tech earnings. The S&P 500 finished 0.1% up at 6305, while the Nasdaq ended 0.5% higher. Most strategists are of the view that earnings momentum and a falling dollar will help US stocks remain bullish, even though valuations may be stretched. In related markets, the VIX rose 1.5% while the dollar index and the US 10-year treasury yield dropped 0.6% and 4 bps respectively. Elsewhere, gold jumped 1.4% to over $3400/ounce on President Trump's next move on tariffs while oil fell for a third day as talks between the US and its trading partners continued.

Stock Futures:

Eternal Ltd, Persistent, AU Bank, and Reliance witnessed a significant surge in market activity, marked by pronounced increases in both trading volumes and price volatility. This heightened interest suggests a notable shift in investor sentiment, as market participants actively re-evaluate and reposition, primarily influenced by anticipation of sector-specific catalysts or impending earnings announcements.

Eternal Ltd. shares surged, logging their best single-day gain in three months on heavy volumes, ahead of its Q1FY26 earnings release, which revealed after-market hours a 90% YoY plunge in consolidated net profit to Rs 25 Cr. This profit contraction was overshadowed by a robust 70% YoY revenue increase to Rs 7,167 Cr, propelled significantly by its quick commerce arm, Blinkit. The stock's 5.1% price appreciation, alongside a 3.2% rise in open interest, saw futures open interest climb to 67,713 contracts with a fresh addition of 2,098. In the options market, total call option open interest stood at 27,149 contracts versus 21,855 in put options. New additions favoured puts, with 9,831 contracts added compared to 8,098 in calls, as the Put-Call Ratio (PCR) jumped to 0.81 from 0.63, indicating a shift in sentiment with options writers possibly unwinding call positions while put writers added protection.

Persistent Systems Ltd. stock demonstrated positive momentum on Monday, gaining 4.1%, even as the broader IT sector navigated recent volatility stemming from mixed Q1FY26 earnings from other major players like TCS, influencing the Nifty IT index's fluctuations. This pre-earnings surge, with Q1FY26 results due on 23rd July, 2025, suggests investor confidence, possibly underpinned by the company's recent corporate actions and strategic initiatives. The price gain was accompanied by significant short covering, evidenced by an 8% decrease in futures open interest, with 2,659 contracts shed, bringing the current total to 30,403. In the options segment, call option open interest stands at 12,569 contracts, while put options total 7,641 contracts. Notably, call options saw a decrease of 1,594 contracts, contrasting with a new addition of 114 put option contracts. This combination of short covering in futures and a decline in call open interest alongside a modest increase in put open interest suggests that market participants, particularly option buyers, are becoming less bullish on extreme upside while put writers are slightly adding to protection, indicating a cautious optimism or potential consolidation around current levels ahead of the earnings announcement.

AU Small Finance Bank Ltd. (AUBANK) shares declined sharply by 5.6%, despite reporting a 15.6% YoY increase in net profit to Rs 580.9 Cr and a 6.5% YoY rise in net interest income (NII) to Rs 2,044.6 Cr for Q1FY26. The market's adverse reaction was predominantly triggered by a discernible deterioration in the bank's asset quality. This price fall was characterised by short addition, as futures open interest expanded by 3.3% with 549 new contracts, bringing the total to 17,212. In the options segment, call option open interest increased significantly by 3,908 contracts to a total of 10,283, while put option open interest saw a more modest addition of 1,036 contracts, reaching 6,181. The Put-Call Ratio (PCR) consequently decreased to 0.60 from 0.81, indicating a pronounced bearish shift in market positioning, with options buyers aggressively writing call options, anticipating further downside, and options buyers exhibiting a reluctance to cover put positions, signalling expectations of continued weakness.

Reliance Industries Ltd. (RIL) shares witnessed their steepest single-day decline in three months, accompanied by the highest daily trading volumes for the month, closing below their previous four-week low. This downturn, a 3.4% price decrease, occurred despite the company reporting its highest-ever quarterly consolidated net profit of Rs 26,994 Cr for Q1FY26. The market's counter-intuitive reaction stemmed from the significant inflation of this record profit by a one-time gain of Rs 8,924 Cr from the sale of its stake in Asian Paints. The price fall was indicative of short addition, as futures open interest surged by 5.4%, with 11,888 new contracts added, equivalent to 59.4 Lc shares—the highest single-day addition in the last three derivatives series. Concurrently, the Put-Call Ratio (PCR) plummeted from 0.47 to a series-low of 0.39. Option positioning revealed a total call option open interest of 2,05,578 contracts, the highest since April 2025, with an addition of 76,735 call contracts, significantly outpacing the 20,998 new put option contracts, bringing total put open interest to 81,191. This robust build-up in call options, despite a falling stock price and PCR, suggests that option writers are aggressively selling calls, anticipating limited upside, while option buyers may be taking directional bets or hedging against further downside, placing the stock in a decisively bearish technical posture.

Put-Call Ratio Snapshot:

The Nifty put-call ratio (PCR) rose to 0.96 from 0.78 points, while the Bank Nifty PCR rose from 0.78 to 0.88 points.

Implied Volatility:

Eternal Ltd and Bosch Ltd have seen significant stock fluctuations, indicated by their high implied volatility (IV) rankings of 72 and 84, showing considerable market uncertainty. Eternal Ltd's IV stands at 39%, and Bosch Ltd's at 30%, leading traders to revise their risk management strategies. Conversely, Hind Zinc and VBL have the lowest IV rankings at 28% and 24%. Their stable prices and lower volatility make them attractive options for traders seeking short-term gains during market fluctuations volatility.

Options volume and Open Interest highlights:

Adani Green and Jindal Stainless indicate strong bullish signals, with call-to-put ratios of 5:1 and 4:1 respectively, pointing to optimism for short-term gains. Nonetheless, these elevated ratios may also reflect overvaluation in the options market, so caution is advisable before initiating new long positions. Conversely, IEX and BlueStar show signs of weakness, with higher put-to-call ratios of 3:1 and 2:1 and increasing volumes, indicating investor concerns about potential downside risks. While this suggests a bearish sentiment, the rise in put activity could also mean the market is oversold, offering contrarian trading opportunities for traders expecting a reversal. In terms of option positioning, BDL and Patanjali Foods reveal notable interest in calls, with Laurus Labs and Trent Ltd showing activity on the put side. These trends imply strong expectations for price movements and support levels. Overall, these patterns point to growing market volatility, favouring strategies that leverage 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, retail clients showed a bullish trend by adding 1,831 contracts, while Foreign Institutional Investors (FIIs) supported this outlook with an addition of 2,820 contracts. In contrast, Proprietary traders took a bearish stance, cutting their positions by 5,908 contracts, suggesting a potential downside or profit-taking. In stock futures, retail clients continued their positive accumulation, adding 955 contracts, reflecting selective bullishness. Conversely, FIIs significantly reduced their exposure by 9,932 contracts, indicating a bearish outlook on certain stocks. Meanwhile, Proprietary traders surged ahead aggressively, adding 21,302 contracts, indicating strong directional bets or active trading strategies. The contrasting activities of FIIs and Proprietary traders in stock futures highlight an evolving market dynamic that should be closely monitored.

Securities in Ban for Trade Date 22-July-2025:

1) BANDHANBNK
2) RBLBANK  

Nifty

Bank Nifty

Stocks with High IVR:

Stocks with Low IVR:

Stocks With High IVP:

Stocks With Low IVP:

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