Thursday, August 19, 2010

Markets Today - 18/8/2010 - Disclaimer Post Applies

Nifty trading at premium to spot, call shedding across strike prices indicates markets to continue its upward momentum. However, we expect the upside to be limited to 5,500 on account of more call concentration than puts. The range for August series is 5,600 and 5,300 on account of concentration with 5,400 acting as support for near term.

Option Analysis:
·         Call writing: In today’s trading session, shedding was witnessed across strike prices. Major call shedding was witnessed at 5,500 and 5,400 of 18.76 lakh shares and 17 lakh shares respectively. Concentration is being observed at 5,600 CE of 96 lakh shares.

·         Put Writing: On the other hand, shedding was seen at and below 5,100 PE and fresh writing above 5,100 PE. Major writing was seen at 5,500 PE of 13 lakh shares in open interest. Concentration is being observed at 5,300 PE of 118 lakh shares.
Implications: Call shedding across strike prices and strong put writing at 5,500 levels indicates markets maintaining its upward momentum with upside capped at 5,500 on account of more call concentration than put and the downside is limited to 5,400 on account of more put concentration than calls. We expect markets to trade in range of 5,600 and 5,300 for August expiry.
FIIs and DIIs activity in capital market segment
·         FIIs were net buyers of Rs 674 crore with Gross buyers of Rs 3,118 crore and Gross Sellers of Rs 2,444 crore.
·         DIIs were net sellers of Rs 113 crore with Gross buyers of Rs 1,579 crore and Gross sellers of Rs 1,692 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
·         Volatility for 18th August, 2010 close at 16.4 which is 6.98% lower as compared to previous close, after touching an intraday high of 17.76 and low of 15.42.
Implications: Indian VIX plunged for the second consecutive day and made a new low of 15.4 in today’s trading session. We expect it to move upwards and are Bullish on the same.

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