Options traders are bracing for renewed turmoil in India’s stock market as diplomatic friction threatens to undermine the fragile US-Iran ceasefire.
A day ahead of high-stakes talks in Pakistan, Thursday’s NSE data revealed an increase in options selling. Activity suggests that Nifty 50 will face stiff resistance at 24,000 points, while negative support is expected to remain between 23,000 and 23,500 till Tuesday.
The market caution follows a volatile session where the Nifty 50 fell 0.9% to 23,775.10 points, and the S&P BSE Sensex fell 1.2% to 76,631.65. The decline overshadowed a portion of Wednesday’s 4% rally, which was triggered by President Trump’s announcement of a two-week pause in hostilities.
technical resistance
The level of 24,058 has emerged as an important range for technical analysts. The figure represents a 50% retracement of the index’s rally from a multi-month low in April to a record high in January.
“Substantial call option writing at 24,000 suggests this is a strong resistance,” said Kriti Shah, quant analyst at Equirus Securities. “Market behavior needs to be carefully monitored at this stage to ascertain whether the recovery can be sustained.”
geopolitical friction
Optimism about the ceasefire is being tested by disagreements over extending the ceasefire to Lebanon and reopening the Strait of Hormuz. These tensions have resulted in energy prices remaining high; Brent crude has risen 33% to $96.62 a barrel since the conflict began on February 28.
“The war will end only when Israel wants to end it,” said Shankar Sharma, a UAE-based investor. He warned that India’s stock market faces a “troubling situation”, noting that portfolio returns could remain as low as in the last two years.
institutional deviation
While the Nifty 50 recovered from its 52-week low of 22,182.55 hit last Thursday, foreign portfolio investors remain skeptical. FPIs were net sellers ₹Despite the huge surge, Rs 1,335.53 crore was received in cash on Wednesday. In contrast, domestic institutional investors provided relief through net buying. ₹4,168.17 crores.
Swarup Mohanty, vice-chairman and chief executive, Mirae Asset Investment Managers (India), suggested that although volatility will persist, a repeat of last week’s lows is unlikely unless the geopolitical situation worsens. “I will wait and see how the ceasefire resolves,” Mohanty said, adding that he wanted to use the market decline to remain fully invested.
original version This story appeared on Livemint.com.
