Put Call Ratio (PCR) measures investor’s sentiment and is a contrarian indicator. It is a ratio of number of put option upon call options. Reading below 0.80 indicates extreme pessimism which is often an oversold level while readings above 1.75 indicate optimism. Historical observation shows that Nifty gives a pullback most of the time when the reading is below 0.75 or above 1.75.

Insight: The PCR has been hovering around the 1.72 mark indicating that Index is reaching an extreme. This may coincide with minimal price rise for Nifty index in next few weeks.