Higher put writing at lower levels than calls indicates strong support at lower levels especially at 5,300. However, on other hand, major call writing at higher levels indicates less upside. So, we believe markets to trade in a narrow range where the upside is capped at 5,500 and 5,400 maintaining a strong support for near term and 5,300 at lower end for August series.
Option Analysis:
· Call writing: In today’s trading session shedding was witnessed at in-the-money strikes whereas writing was seen at higher strikes. Major writing for consecutive second trading session was seen at 5,600 CE of 11.52 lakh shares. Concentration is observed at 5,600 CE of 90 lakh shares.
· Put Writing: On the other hand, fresh writing in puts was witnessed across strikes. Major addition for consecutive second trading session was seen at 5,300 PE of 10 lakh shares. Concentration is observed at 5,300 PE of 101 lakh shares.
Implications: Concentration and strong put writing at 5,300 levels indicates this as to act as a strong support for August Series and 5,400 for the near term. Whereas major call writing at higher level indicates Nifty losing its current momentum and facing strong resistance. We expect market to trade between 5,600 and 5,300 for August series on account of concentration.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 5th August, 2010 close at 17.71 which is 3.93% higher as compared to previous close, after touching an intraday high of 17.72 and low of 15.83.
Implications: Indian VIX moved upwards after making a new low in yesterday’s trading session. We expect it to move upwards and are Bullish on the same which would have negative effect on Nifty
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