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The Day That Was:

Nifty Futures: 24,568.5 (-0.3%), Bank Nifty Futures: 54,060.4 (-0.4%).

Nifty Futures and Bank Nifty Futures continued their corrective phase for the third consecutive session, closing with significant losses amidst a broadly bearish sentiment driven by geopolitical and domestic factors. Nifty Futures declined by 83.2 points, with its open interest rising by 4.2% to 1,76,29,950 shares, an increase of 7,14,000 shares, indicating a short build-up. Similarly, Bank Nifty Futures fell by 199 points, with a 3.3% increase in open interest to 30,11,645 shares, rising by 94,885 shares, also signaling a short build-up. Nifty futures premium decreased from 151 to 142 points, while Bank Nifty premium narrowed from 439 to 405 points. The domestic equity indices posted modest losses for the third straight day, marking a second consecutive monthly decline in August. The negative sentiment was largely fueled by rising U.S.-India tensions and the implementation of a 50% U.S. tariff on certain Indian imports, which is expected to negatively impact economic growth and corporate earnings. This geopolitical development continued to weigh on investor confidence, overshadowing positive domestic cues. The change in the weekly expiry for Nifty contracts from Thursday to Tuesday also contributed to the cautious mood. Sectoral performance was mixed, with realty, oil & gas, and auto shares declining, while FMCG, media, and consumer durables advanced. India VIX, a gauge of market volatility, dropped 3.49% to 11.75. Concurrently, the rupee closed at an all-time low of 88.19 against the US dollar, breaching the 88 mark for the first time.

Global Movers:

US equities dropped from record highs on Friday, led by declines in tech stocks as data showed that inflationary pressures are persisting. The S&P 500 slipped 0.6% to 6460 while the Nasdaq 100 lost 1.2%, but both were up for the fourth month in a row. Core PCE rose 2.9% on a YoY basis, well above the Fed's 2% target. At the same time, consumer spending rose by the most since April, indicating robust demand. US markets are shut Monday due to the Labor Day holiday, but are heading into a month which has been weak historically. Talking commodities, Gold rose 0.9% and settled just under $3450/ounce after Germany and France called for secondary sanctions on Russia's backers, while brent fell to $68/barrel as hedge funds cut their bullish bets to a 14-year low.

Stock Futures:

CG Power, Colpal, BSE Ltd, and M&M had seen noteworthy market activity, exhibiting significant intraday volatility and a remarkable surge in trading volumes. This heightened engagement is largely attributable to distinct, company-specific developments and prevailing market sentiment.

CG Power and Industrial Solutions Ltd. surged, riding a wave of positive sentiment after its subsidiary, CG Semi, announced the launch of one of India's inaugural end-to-end Outsourced Semiconductor Assembly and Test (OSAT) facilities in Gujarat. The stock's ascent was driven by a long addition with a 4.8% price gain and a 5.6% increase in open interest, reflecting robust bullish conviction. Futures open interest swelled by 1,147 contracts to 21,592, with the premium to spot price widening to 4.15 points from 2.55 points, a 1.6-point jump. In the options arena, the call option open interest stood at 5,581 contracts against 3,724 for puts, as new call additions of 3,731 contracts dwarfed the 2,001 new put contracts, suggesting a prevailing bullish stance among option buyers betting on further upside.

Colgate-Palmolive (India) Ltd. experienced a sharp jump in its share price, emerging as a top gainer on the Nifty Midcap 150 index. This upswing was fueled by news that a Group of Ministers had finalized a plan to potentially slash the Goods and Services Tax (GST) on consumer goods, including toothpaste, from 18% to 5%, a move anticipated to ignite consumer demand. The stock witnessed a short covering, marked by a 3.1% price gain and a 9.4% drop in open interest. Futures open interest plummeted by 2,052 contracts to 19,731, signaling unwinding of bearish positions. In the options market, the total open interest was tilted towards calls with 6,612 contracts versus 4,745 for puts, with call additions of 2,220 contracts outstripping the 1,296 new put contracts. The put-call ratio (PCR) decreased to 0.72 from 0.79, indicating that new option positions were primarily established on the call side, suggesting a bullish sentiment.

BSE Ltd. buckled under pressure, closing with a significant decline amid a high-profile resignation and persistent regulatory concerns. The stock's valuation came under fire following SEBI's proposals to shift the derivatives market to longer-dated contracts, which has raised fears about a potential erosion of trading volumes and fee revenues. This downdraft was characterized by a short addition with a 3.6% price decrease and a 7.8% increase in open interest, as futures open interest expanded by 2,528 contracts to 35,052. The options market saw a substantial accumulation of call contracts, with 5,998 new additions compared to 2,498 new put contracts. The total open interest reflected a bearish bias, with 23,958 call contracts to 14,908 put contracts, indicating a significant short buildup as traders hedged or speculated on further downside.

Mahindra & Mahindra Ltd. saw its stock price decline, succumbing to short-term profit-booking after a powerful rally had propelled it to a new 52-week high just days earlier. The retreat was amplified by negative sentiment within the broader Nifty Auto index. The stock's fall was marked by a short addition, as the price decreased by 2.9% and open interest increased by a marginal 0.1%. Futures open interest added 120 contracts to a total of 92,380, and the premium to spot price widened to 18.1 points from 17.6 points, a 0.5-point increase. In the options segment, call open interest stood at 14,644 contracts versus 10,664 for puts, with 4,743 new call contracts added compared to 3,090 new puts, pointing to a cautious stance as traders either bought puts to protect their positions or wrote calls to cap their exposure in anticipation of limited upside.

Put-Call Ratio Snapshot:

The Nifty put-call ratio (PCR) fell to 0.71 from 0.86 points, while the Bank Nifty PCR fell from 0.97 to 0.89 points.

Implied Volatility:

SBI Card & Payments and RVNL are currently facing increased market volatility, as indicated by their high implied volatility (IV) rankings of 78% and 73%, respectively. Their absolute IV levels are also relatively elevated, with SBI Cards at 30% and RVNL at 44%. These figures suggest that options on these stocks are priced higher due to greater market uncertainty and the potential for significant price fluctuations. Traders should remain cautious, as these stocks may experience erratic price movements and come with increased risk. In contrast, PNB Housing and LT are showing the lowest implied volatility rankings in the group, with IV levels of 28% and 15%, respectively. This indicates more stable price action in these stocks, which leads to more reasonably priced options. In such a market environment, straightforward directional strategies such as buying calls or puts generally turns out to be more beneficial. This may also presents a more favourable risk profile for options sellers.

Options volume and Open Interest highlights:

Bosch Ltd and United Spirits are currently displaying strong bullish momentum, as reflected by their elevated call-to-put volume ratios of 4:1 each. This significant bias towards call options indicates a generally optimistic outlook among market participants, with expectations of further upside in these stocks. However, the increased demand for call options has driven up option premiums, which could reduce the attractiveness of initiating new long positions at this point. In contrast, Persistent Systems and Info Edge (India) are under considerable downward pressure, as evidenced by their high put-to-call ratios. This imbalance suggests a predominantly bearish sentiment. The rise in put option activity implies these stocks may be approaching oversold conditions, which could attract the attention of contrarian traders. Still, the prevailing negative sentiment warrants a cautious and risk-conscious approach. From an options flow perspective, Interglobe Aviation and Angel One are showing positive signals, with a surge in call buying pointing to growing investor interest and potential for upward momentum. Conversely, PFC and REC Ltd have seen an increase in put option volumes, indicating a shift toward a more cautious or defensive market stance. This trend may suggest increased short-term volatility for these stocks. (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 change of 6,681 contracts was observed. Clients exhibited a bullish stance, augmenting their long positions by 2,681 contracts, while proprietary traders also displayed a constructive outlook, adding 3,332 contracts. Conversely, Foreign Institutional Investors (FIIs) significantly reduced their exposure by 6,681 contracts, a move that starkly contrasts with the actions of other market participants and suggests a more cautious or bearish sentiment. Shifting to stock futures, the market witnessed a substantial change of 53,979 contracts. The data reveals a collective bullish bias, as both clients and FIIs concurrently increased their holdings. Clients were the primary drivers of this positive trend, adding a commanding 27,794 contracts. Similarly, FIIs demonstrated strong conviction, accumulating an additional 25,054 contracts. Proprietary traders also participated in the optimistic momentum, albeit on a smaller scale, adding 1,131 contracts.

Securities in Ban for Trade Date 01-September-2025: NIL

Nifty

Bank Nifty

Stocks with High IVR:

Stocks with Low IVR:

Stocks With High IVP:

Stocks With Low IVP:

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