Thursday, July 8, 2010

Markets Today - 8/7/2010 - Disclaimer Post Applies

Nifty trading at premium, strong put writing at 5,300 with call shedding across strike prices implies positive momentum to continue. However, we see limited maximum upside to 5,400 on account of weak put writing. So, as mentioned earlier range for near term and July expiry would be between 5,200 and 5,400.

Option Analysis
·         Call Writing: In today’s trading session, major unwinding was witnessed at between 5,100 and 5,400 strike prices with maximum at 5,400 of 8.7 lakh contracts. However, marginal writing was observed at 5,500 of 6 lakh contracts. Concentration of open interest still observed at 5,500 of 92.22 lakh contracts.
·         Put Writing: On the other hand, major shedding of open interest was observed at lower levels with maximum at 5,100 of 10.4 lakh contracts with maximum writing at 5,300 of 7.5 lakh contracts. Concentration of open interest still observed at 5,200 of 86.24 lakh contracts.
Implications: Strong shedding of call across strikes with writing of put at 5,300 levels and shedding at lower levels indicates upside momentum to continue. However, we still maintain our view for July series to settle between 5,200 and 5,500 on account of concentration.
FIIs and DIIs activity in capital market segment
·         FIIs were net buyer of Rs  957.06 crore 
·         DIIs were net sellers of Rs 270 crore with 
India VIX (Inverse relationship between Nifty and Indian VIX)
·         Volatility for 8th July, 2010 close at 21.12 which is 4.48% lower as compared to previous close, after touching an intraday high of 21.32 and low of 20.78.
Implications: Indian VIX after plunged in today’ trading session as compared to yesterday but closed almost at today’s high. We are “Bullish” on the same and expect it to move upwards.

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