Nifty futures (5037) closed at almost a 30 points discount to spot Nifty (5066.55)
Implications: We believe that with the futures trading at such a heavy discount fresh shorts will be initiated in the market on any bad news. With the debt rating on Spain being cut we believe that there will be fresh shorts initiated in the system.
Option Analysis
· Call Writing: Fresh writing of call at higher strike prices. 5100 and 5200 added open interest of more than ~9 lakh and ~7 lakh contracts respectively. Major Concentration of open interest is observed at 5100CE of ~53 lakh shares.
· Put Writing: On the other hand, fresh writing was observed at lower levels between 4900 and 5000. 4900PE added open interest of ~8.06 lakh contracts and 5000PE added open interest of ~6.9 lakh contracts respectively. Major concentration is being observed at 4800PE strike price of 51.47 lakh contracts.
Implications: We expect market to trade between 5100 and 4900 for short term i.e. the start of the June series. We also believe that medium to long term investors should buy in the markets at 4800 levels on the Nifty.
FIIs and DIIs activity in capital market segment
· FIIs were net buyers of Rs 409 crore with Gross buyers of Rs 2,501 crore and Gross Sellers of Rs 2,100 crore.
· DIIs were net buyers of Rs 342 crore with Gross buyers of Rs 1,206 crore and Gross sellers of Rs 863.46 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 28th May, 2010 close at 26.43 which is 8.89% lower as compared to previous close, after touching an intraday high of 28.59 and low of 26.53.
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. However do not rule out a short term bounce back in this index.
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