The BSE Sensex and Nifty both surged over 1.5% on Tuesday, backed by ₹6,856 crore in net foreign institutional purchases. This upward momentum has allowed domestic equities to decouple from declining global peers in recent weeks. Nonetheless, market observers warn that the Nifty put-call ratio has reached levels that previously triggered a 16% downturn, making current valuations fragile. Crucially, volatile crude oil prices hovering between $104.80 and $106 per barrel continue to pose a threat to further equity gains.
Key points
The Nifty aggregate put-call ratio reached 1.52, exceeding the historical threshold that…: The Nifty aggregate put-call ratio reached 1.52, exceeding the historical threshold that previously led to a 16% market decline.
Indian equities have shown notable resilience against international declines, with the Ni…: Indian equities have shown notable resilience against international declines, with the Nifty climbing 5.34% since 8 October.
Middle East geopolitical tensions and the upcoming U.S. midterm elections are expected to…: Middle East geopolitical tensions and the upcoming U.S. midterm elections are expected to sway crude prices and market sentiment.
Sources checked by our analysis pipeline: 1
Indian stocks rose for the fourth straight day on Tuesday, reaching their highest level in the last two months, supported by a decline in crude oil prices and optimism ahead of the US mid-term elections. However, a key contrarion indicator suggests that the market may have entered overbought territory, raising the possibility of a decline as investors sell shares to book profits.
The Nifty closed 1.58% higher at 23,810.85, its highest since 4 September, while the BSE Sensex advanced 1.62% to settle at 76,917, the highest since 1 September. The market capitalization of BSE-listed companies rose by ₹4.5 trillion. Foreign institutional investors turned net buyers for the third consecutive day, buying shares worth ₹6,856 crore on Tuesday, provisional data from NSE showed.
The Nifty is now trading 7.3% above its 52-week intraday low of 22,179.9 on 8 October, triggering expectations that markets might be close to topping out and could witness profit-taking in the short term. The indicator in question is the Nifty aggregate put-call ratio (PCR) open interest which reached 1.52, its highest since 5 January's 1.46, signalling that…
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