Wednesday, May 26, 2010

Markets Today - 25/5/2010 - Disclaimer Post Applies

Implications: Nifty May series trading at premium and bearish view on volatility indicates fresh buying at current levels. So, we expect Nifty to closed above 4,800 for the month of May series. We see June series more volatile than May series on back of concentration level in options at 4,700 and 5,100. So, we would recommend   the traders can create partial long position at current levels and rest at 4,730 (worst case scenario for the month of May series)     
Option Analysis
May Series: In yesterday trading sessions, we have observed call writing at 4,800 and 4,900 strike prices while put addition was seen at 4,700. Just 2 trading sessions left for the May series, we have observed fresh call  addition of more than ~23 lacs shares at above levels. By observing concentration level, we expect may series to settle between 4,800 at lower end to 5,000 at upper end.
June Series: Major activity in put at lower levels and call activity at higher levels. On the Put options, major addition was seen at 4,700 and 4,600 of ~6.9 lacs and ~5.3 lacs respectively. On the other hand, call addition at 4,800 and 4,900 of ~6.7 lacs and ~7.6 lacs shares respectively. Major concentration of call observed at 5,100 and put at 4,700.
Implications: On back of May concentration, we expect market to settle between 5,000 and 4,800. It will be too early to comment on June range. However, wider range for the June series on back of concentration are 4,700 at lower end and 5,100 at higher end.  
FIIs and DIIs activity in capital market segment
·         FIIs were net sellers of Rs 1,464 crore with Gross buyers of Rs 1,761 crore and Gross Sellers of Rs 3,225 crore.
·         DIIs were net buyers of Rs 406 crore with Gross buyers of Rs 1,810 crore and Gross sellers of Rs 1,404 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
·         Volatility for 25th May, 2010 close at 34.5 which is 10.3% higher as compared to previous close, after touching an intraday high of 35.85 and low of 31.05.
Implications: In today’s trading session, volatility gave a good spike till 34 levels thereby settling at 31. We expect volatility to come down. Thus, our view is to go short on Volatility on every rise.

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