Investors scramble for cover as Nifty's 52-week low looms

Investors have ramped up purchases of a hedge to protect their portfolios, fearing that the escalating war in West Asia could sink Nifty 50 to its 52-week low this month, even as analysts expect an odd bounce during the correction.

- Ram Sahgal

The demand for the 22,000 Nifty put option has now surged, pushing its price up by 15 times in two weeks since the conflict, as the oil price spike spooked investors worldwide.

The put was trading at 167.15 a share (65 shares equal one contract) on Friday, compared with 10.9 on 27 February, a day before the war.

Investors purchase put options to protect their portfolios from downside risk.

It is the opposite of a call option, which is purchased during bull markets.

Demand for the 22,000 put is reflected in the rise of its open interest (OI) - a gauge of money flowing into a market - to 5.33 million contracts on Friday from 1.4 million when the war began.

The US and Israel strikes and the retaliation by Iran across the Gulf region show no signs of abating. Active Brent futures have surged by 42% to $103.14 a barrel since the conflict broke out, according to Bloomberg data.