
FPIs bet on limited Nifty movement amid simmering India-Pakistan tensions
To hedge against a possible breakout or breakdown triggered by geopolitical events, they purchased a 24,000 put and a 25,000 call.
The trade came on a day of rising tensions: Prime Minister Narendra Modi gave the Indian armed forces a free hand to retaliate against Pakistan following a terror strike in Pahalgam that killed 27 people, including a foreign national.
The
Nifty
closed flat at 24,336 on Tuesday, having staged an almost 12% recovery from a multi-month low of 21,743.65 on 7 April. Analysts broadly expect the index to consolidate around current levels through May—unless geopolitical tensions spiral.
The iron butterfly strategy reflects an expectation of limited movement, with potential movement capped at about 1.6% on either side of 24,500, even as risks of military conflict linger.
Read this |
Tensions are rising on the border but FPIs aren't worried
The 'smart money"—meaning institutional players—are using a strategy called the 'iron butterfly', which involves selling a call and a put of the same strike, and buying calls and puts further away from that level, said Kruti Shah, quant analyst at Equirus.
What makes the move even more unusual is the positioning pattern: FPIs were net sellers of both index calls and puts—on Nifty and
Nifty Bank
—even as geopolitical tensions escalated, a backdrop that would typically warrant hedging for volatility.
Their net short position on index calls stood at 17,795 contracts, while their net short put position was at 46,075 contracts, according to exchange data.
This is a rare trade as FPIs tend to be net long both index calls and puts, noted Rohit Srivastava, founder, IndiaCharts, an analytics firm.
In options trading, the seller of a call doesn't expect the market to rise above the strike price plus the premium received from the call buyer, while the seller of a put doesn't expect the market to fall below the strike price minus the premium received from the put buyer.
While such trades typically signal expectations of limited market movement, FPIs are using a complex options strategy to hedge against the risk of markets moving beyond their expected range over the next month.
Read this |
Market shift: Retail investors and HNIs turn bearish on index futures following Pahalgam attack
According to Rajesh Palviya, head of derivatives research at Axis Securities, the trade reflects that foreigners are discounting a 'major conflagration at the border."
FPIs sell a 24,500 call and a 24,500 put, earning a total premium of
₹
862 per share (each Nifty contract has 75 shares). To cap potential losses, they buy a 24,000 put and a 25,000 call, paying
₹
464 per share.
This leaves a maximum potential profit of
₹
398 per share (
₹
862 -
₹
464), which materialises only if the Nifty closes exactly at 24,500. Any move outside this strike reduces profit.
Losses are limited to
₹
100 per share if the index breaks below 24,100 or above 24,900, thanks to the protection from the outer options.
For example: If the Nifty drops to 23,900, the loss from the lower breakeven point at 24100 is
₹
200. But, as the purchased 24,000 put gains
₹
100 in value, the maximum loss is restricted to
₹
100.
Also read |
Vijay L. Bhabwani's Ticker: Follow-up buying needed as short covering lifts Nifty, Bank Nifty past resistance
If the index rises to 25,100, the loss from the upper breakeven point of 24,900 is
₹
200, but the 25,000 call gains
₹
100 in value, again capping the loss.
'The risk-reward ratio is 1:4, that is for every rupee spent, you expect a return of four rupees, making the strategy viable," said Equirus' Shah.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


India.com
10 minutes ago
- India.com
Green Diplomacy: Modi And King Charles Plant Legacy At Sandringham – One Tree, Two Nations, Countless Mothers
Sandringham (United Kingdom): Fresh from signing a historic trade deal with his U.K. counterpart Keir Starmer, Prime Minister Narendra Modi met King Charles III at Sandringham House and handed him a gift – which was not a gold ornament or an official scroll, but a young tree sapling. Its roots held more than soil; they carried the sentiment of a son honouring his mother and a nation honouring its planet. The sapling is a living emblem of India's new green movement, ' Ek Ped Maa Ke Naam ', launched by PM Modi earlier this year. It calls upon citizens to plant a tree in their mother's name, turning an act of memory into one of healing. Long known for his commitment to the environment, King Charles embraced the gesture wholeheartedly. 'His Majesty King Charles III is very passionate about nature, environment and sustainable living. His joining the ' Ek Ped Maa Ke Naam ' movement is very noteworthy and will inspire people around the world,' Prime Minister Modi posted on X after the meeting. Had a very good meeting with His Majesty King Charles III. We discussed different aspects of India-UK relations, including the ground covered in trade and investment in the wake of CETA and Vision 2035. Other subjects of discussion included education, health and wellness,… — Narendra Modi (@narendramodi) July 24, 2025 His Majesty King Charles III is very passionate about nature, environment and sustainable living. Thus, his joining the 'Ek Ped Maa Ke Naam' (a tree for Mother) movement is very noteworthy and will inspire people around the world. — Narendra Modi (@narendramodi) July 24, 2025 The meeting between the two leaders took place at the King's country residence in Norfolk, just hours after Modi and Starmer signed the first-ever comprehensive India-U.K. Free Trade Agreement, a landmark deal expected to redefine economic relations between the two countries. At Sandringham, the mood was gentler, warmer and more personal. A Moment of Connection During their time together, King Charles received the sapling graciously and acknowledged its symbolism. The British Royal Family confirmed the meeting and the gift in a social media post on X, 'This afternoon, The King received the Prime Minister of the Republic of India, @NarendraModi, at Sandringham House. During their time together, His Majesty was given a tree to be planted this Autumn, inspired by the environmental initiative launched by the Prime Minister, Ek Ped Maa Ke Naam, which encourages people to plant a tree in tribute to their mothers.' This afternoon, The King received the Prime Minister of the Republic of India, @NarendraModi, at Sandringham House. During their time together, His Majesty was given a tree to be planted this Autumn, inspired by the environmental initiative launched by the Prime Minister, 'Ek… — The Royal Family (@RoyalFamily) July 24, 2025 This was not just a photo-op. According to a statement from the Ministry of External Affairs, the two leaders discussed wellness, sustainability and cultural traditions that span centuries. They touched upon subjects close to both their hearts – the wisdom of Ayurveda, the practice of Yoga and the need to restore ecological balance. Prime Minister Modi expressed his happiness at King Charles' return to royal duties and good health. In a world reeling from climate warnings and carbon deadlines, their shared love for nature made for a comforting counter-narrative, a reminder that royal titles and elected offices mean little without clean air, green earth and personal gestures. Trade, Tradition and a Tree in the Ground As the leaders spoke, they also highlighted the new chapter opening between their countries. The just-signed Comprehensive Economic and Trade Agreement (CETA) featured prominently in their discussion. It is the first full-scale trade agreement India has ever signed with a G7 nation. For the United Kingdom, it is the biggest since Brexit. It lays the groundwork for a doubling of bilateral trade by 2030 and carries significance for both economies. Modi informed the King about the vision behind the ' Ek Ped Maa Ke Naam ' campaign and how it ties into India's broader climate commitments. He also outlined India's progress in renewable energy and its long-term vision for sustainability. They spoke of joint efforts to address climate change, with India's rapidly evolving green infrastructure and the U.K.'s technological edge forming a natural alignment. The King, who has championed sustainability and environmental justice since his days as the Prince of Wales, found common cause with the Indian PM on many of these fronts. They also spoke about cooperation within the Commonwealth, a shared legacy that continues to evolve. Both leaders expressed hope that the partnership between India and the United Kingdom would inspire collaboration across sectors such as cultural, educational, environmental and economic. One Sapling, Two Histories and a Global Message As the meeting drew to a close, the tree sapling was placed gently into the King's care. It will be planted later this year on the expansive grounds of Sandringham House, its leaves destined to unfurl under an English sky. With it, India's message to honour mothers through action and the earth through memory finds a home in British soil. PM Modi extended his thanks to King Charles for the hospitality and invited him to visit India on a future State Visit. The King's acceptance of the sapling was not merely a royal courtesy, but a commitment, a nod to shared priorities and perhaps, to a friendship that reaches beyond policy into something far more timeless. As world leaders weigh climate targets and trade metrics, the sight of two seasoned statesmen speaking softly about saplings and mothers reminds us that diplomacy, too, begins in the soil.


Economic Times
10 minutes ago
- Economic Times
New Delhi opens govt procurement to UK companies
Representational For the first time, India will open approximately 40,000 high-value contracts from central ministries and departments in sectors such as transport, green energy and infrastructure to UK bidders. UK-origin goods with just 20% domestic content will be treated as 'Class II' local suppliers under India's Public Procurement Order (PPO), a classification previously reserved for Indian suppliers with 20-50% local content under the CETA. India will offer concessions in government procurement to UK firms under the free trade agreement, a move experts see as a strategic shift away from using public procurement as a tool for domestic industrial development. After the UAE, India has opened its central government procurement for British companies, subject to certain conditions. "The GP chapter provides a legal guarantee for Indian suppliers to be treated on par with UK suppliers regarding social value considerations within procurement processes, ensuring a level playing field for Indian businesses to compete fairly," said an official.
&w=3840&q=100)

Business Standard
10 minutes ago
- Business Standard
FTA with UK adds strength to India's hand in other deals: Sunil Mittal
Soon after India and the United Kingdom (UK) signed the free trade agreement (FTA) on Thursday, industry leaders cheered the move. Sunil Bharti Mittal, chairman of Bharti Enterprises and co-chair of the India-UK CEO Forum, and Chandrajit Banerjee, director general, Confederation of Indian Industry (CII), who were in Chequers (near London) for the FTA signing as part of Prime Minister Narendra Modi's entourage, spoke to Nivedita Mookerji on the various aspects of the deal. Edited excerpts from a Zoom conversation: Who's the biggest winner in this FTA? Sunil Bharti Mittal (SBM): It's a win win for both sides with a balanced outcome after a very long and hard negotiation…. I think you will now see a lot of British companies getting much more confident about investing in India, working in India, setting up their bases in our country. The Prime Minister spoke today of taking the bilateral trade from $56 billion to $112 billion in five years—It's an ambitious target, but achievable, given the way this FTA has been set up. So I would say it's hard for FTAs to be agreed. Your 'asks' and their 'gives', their 'asks' and our 'gives'--there's always a resistance on both sides…. But over here, you don't see any major resistance, finally, because both have come to an agreement which is balanced. Chandrajit Banerjee (CB): There are many sectors from the Indian side which will benefit. From both manufacturing as well as services. But if you see some of the critical sectors, like textiles and apparels, that opens up a huge market. In the pharma sector also, we are getting huge opportunities. The small and the mid size companies across the engineering area as well as auto components will also gain. Plus, the labour intensive sectors like leather and footwear will benefit due to the increased access to the UK market. Will there be a ripple effect of the UK agreement on the US deal that is in the works? SBM: I think closing of this deal is important for India. It does add strength to India's hand. But the US is altogether different. It's the largest market in the world,… It's good to have this one out of the way. Now you will have one less trade deal to work on and the negotiators will be able to concentrate more on the next one. The one with the EU is expected to be done in the next few weeks or months. As for the US, some interim deal should be done. It's easy for you and I to discuss it here, but there are new developments in the US on a daily basis. CB: In some ways, the UK FTA is a signal to the world that India has been entering into large number of trade agreements with different countries, both in the eastern hemisphere and now in the western hemisphere, and the Indian industry is competitive. It also shows that India provides not just opportunities to companies to come and participate in the Indian economy in terms of investments, but our companies themselves are investing strongly in other economies…. So, this is indicative of balance of power. Mr Mittal, there's a full chapter on telecom in the deal. Any significance? SBM: Well, I'm delighted to see that chapter, as you can imagine. Both countries will be having open doors for telecom in terms of foreign direct investment (FDI). As you know, Vodafone had 100 per cent in India…. What the FTA will do is to take the agreed position to a hard wired position. Do you think this deal will help in the making of global brands? Hasn't that been a gap for the Indian industry? SBM: I would say yes…. You have to have large corporations first, and then you go global. That's been the norm world over. And the western world has had that privilege for decades, because they became rich much before us. I think India is on that path now, and you will start to see Indian MNCs emerging on the global stage. Tatas have already been there with Jaguar Land Rover (JLR) and others. I think we can count ourselves (Airtel) as that. There are a few other companies which are on that path to some extent--Godrej, Mahindras, for example. For your group, what does this deal mean? SBM: It validates what we've been doing for so many years in sectors such as telecom, real estate and hospitality. We also have the satellite deal—OneWeb--with the British government. So this just strengthens our hand to do more between the two countries. Perhaps, we can pick up some technologies here that we can take back to India and use the technology back home in the Indian market, which is much bigger. We remain agile. We are looking at opportunities. But today, I stand in front of you as the co-chair of the Indian business leaders' delegation, the CEO forum, and my job is to work on the larger piece. In this capacity, I have to see that Indian industry and the British business leadership can combine their minds to take our trade to the level that has been set by the two partners. What are your thoughts on utilisation of trade deals? In many cases, we've seen that we are not able to utilise the deals that are signed. How can the industry help? SBM: This is a rare opportunity where both sides can gain from combining strengths of each other. There's high degree of complementarity between the two nations. And that really makes a very strong, powerful platform, or a bridge, if I may say, between the two countries. You're right that not all trade deals result in tremendous amount of uptick in trade and services or investment. I think this is different. In this case, I feel in the first year itself, as soon as this treaty is ratified, we will see the direction of trade going up in the upwards trajectory. CB: This trade agreement is designed to work for both countries, be it for bilateral investment or bilateral trade. Whether it's small or mid-sized companies, technology, education or anything else, we (India-UK business forum) can form different groups and see to it that we are able to identify the enablers. So there should be possibilities of constructive ways of working towards taking advantage of this trade agreement. Is there anything in this FTA that you think could have been done better? Any gaps? SBM: Well, there's always something that one feels could have been better. Some parts of the industry may feel that certain things could have been better handled. But by and large, I don't think there is any reason to complain. There may be somebody unhappy out there, but, you know, in a trade deal of this nature, it is rare to get to a win win situation like the one we are seeing in this one. What is the overall mood of the industry? SBM: Very good. Industry is very upbeat. CB: I think what we have seen is an amazing partnership between the government and the industry. I think that collaborative framework is going to be a key factor as we move ahead, when industry is taken along and consulted. That collaboration should work to see that FTAs are working in a win win way.