Put Call Ratio (PCR) is one of the most widely used sentiment indicators in Indian options trading. It measures the ratio of Put options traded versus Call options traded on the NSE.
Formula: PCR = Total Put OI ÷ Total Call OI
When more traders are buying Puts (downside protection), PCR rises. When more traders are buying Calls (upside bets), PCR falls. Counterintuitively, a high PCR is often bullish — it means the market is over-hedged and a squeeze higher is likely.
| PCR Range | Signal | What It Means |
|---|---|---|
| Below 0.7 | Bullish | Too many Call buyers — market may be complacent, but bias is up |
| 0.7 – 1.0 | Neutral | Balanced positioning — no strong directional bias |
| Above 1.0 | Bearish | Heavy Put buying — fear in the market, downside bias |
| Above 1.5 | Extreme Fear | Panic hedging — often a contrarian buy signal near bottoms |
PCR works best as a confirmation tool, not a standalone signal. Use it alongside:
1. India VIX — If PCR is high AND VIX is rising, the bearish signal is stronger. If PCR is high but VIX is falling, it may be a false alarm.
2. Price action — PCR above 1.2 with Nifty holding support = strong bullish setup. PCR above 1.2 with Nifty breaking support = genuine bearish signal.
3. Global cues — A bearish PCR during a positive global session often resolves bullishly by end of day.
Nifty PCR is the most widely tracked. Bank Nifty PCR tends to be more volatile and can spike sharply around RBI policy announcements, banking sector news, or quarterly results of HDFC Bank and ICICI Bank.
For intraday trading, Nifty PCR is more reliable. For swing trades around events, watch Bank Nifty PCR closely.
Mistake 1: Treating PCR as a direct signal. A PCR of 1.3 does not mean "sell." It means there is heavy Put OI — which could unwind bullishly if the market holds key levels.
Mistake 2: Ignoring the trend of PCR. A PCR rising from 0.8 to 1.1 is more meaningful than a static 1.1. The direction of change matters.
Mistake 3: Using PCR alone. Always combine with VIX, price action, and global sentiment for a complete picture. The Suhrid dashboard does this automatically.
Live dashboard with VIX, global indices, sector breadth — updated every 60 seconds.
Disclaimer: This article is for educational purposes only. PCR data shown is sourced from NSE and may be delayed. This is not financial advice. Always do your own research before trading.