Major put writing at lower levels with major call writing at higher levels indicates markets to trade in a narrow range wherein 5,300 to act as a resistance for intermediate term and 5,200 to act as s strong support.
Option Analysis
· Call Writing: Higher activity was observed at in-the-money and out-of-the-money strike prices. Maximum addition of open interest was witnessed at 5,300 of 7.08 lakh shares. ~60% of total outstanding open interest is witnessed between 5,500 & 5,300 with concentration at 5,500 indicating strong resistance at higher levels.
· Put Writing: On other hand, weak activity witnessed at higher levels. Major shedding was witnessed at 5,300 strike of 5.38 lakh shares and major writing at 5,000 strike of 7.58 lakh shares. ~46% of total outstanding open interest is witnessed between 5,200 & 5,000 with concentration at 5,200 indicates strong support at lower levels.
Implications: Fresh writing in put at lower levels than calls indicates market would take support at lower levels with 5,200 to act major support on account of concentration. But, we do not expect any significant upside on account of major call writing and put shedding at higher levels. Thus, Nifty could trade in a narrow range of 5,200 and upside to be capped at 5,300.
FIIs and DIIs activity in capital market segment
· FIIs were net sellers of Rs 49 crore with Gross buyers of Rs 1,461 crore and Gross Sellers of Rs 1,511 crore.
· DIIs were net buyers of Rs 134 crore with Gross buyers of Rs 1,037 crore and Gross sellers of Rs 902 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 7th July, 2010 close at 22.11 which is 5.79% higher as compared to previous close, after touching an intraday high of 22.44 and low of 21.22.
Implications: Indian VIX after surging till ~22 levels, closed at day’s high. We are “Bullish” on the same and expect it to move upwards which would have a negative impact on Nifty.
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