Friday, May 28, 2010

Markets Today - 27/5/2010 - Disclaimer Post Applies

Implications: For last 2 trading session market gain significantly on back of short covering. Lower call writing at 5,000, heavy put writing at lower levels and bearish view on volatility indicates “Bullish” view on the market. We expect market to ride current momentum till 5,100 and 4,900 at downside. Strategy remains the same to buy on dips and sell on rise.
Option Analysis
·         Call Writing: Fresh writing of call at higher strike prices. 5,100 and 5,200 added open interest of more than ~12.4 lakh and ~13.05 lakh shares respectively. Major Concentration of open interest is observed at 5,100 of 43.6 lakh shares.
·         Put Writing: On the other hand, fresh writing was observed at lower levels between 4,800 and 5,000. 4,800 and 4,900 added open interest of ~9.6 lakh shares and ~7.8 lakh shares respectively. Major concentration is being observed at 4,800 strike price of 50.6 lakh shares.
Implications: Lower put writing and call writing at 5,100 indicates current upside momentum to continue. So, we expect market to trade between 5,100 and 4,900 for short term an coming to June series lower end may be capped at 4,800 and upper end at 5,100.  
FIIs and DIIs activity in capital market segment
·         FIIs were net sellers of Rs 533 crore with Gross buyers of Rs 3,924 crore and Gross Sellers of Rs 4,457 crore.
·         DIIs were net buyers of Rs 410 crore with Gross buyers of Rs 1,669 crore and Gross sellers of Rs 1,258 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
·         Volatility for 27th May, 2010 close at 29 which is 9.77% lower as compared to previous close, after touching an intraday high of 31.95 and low of 28.95.
Implications: Volatility further plunged by ~10% in today’s trading session. We expect volatility to come down. Thus, our view is to go short on Volatility on every rise.

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