Thursday, September 9, 2010

Markets Today - 9/9/2010 - Disclaimer Post Applies

Nifty is trading at a discount to spot. We expect market to continue its upside momentum on account of shedding of calls at lower strikes and fresh writing of puts at 5,600 and 5,500. Thus, the upside is capped at 5,700 and downside is limited to 5,500 on account of concentration.

Option Analysis:
·         Call writing: During the week, call shedding was witnessed at in-the-money strikes and writing at higher strikes. Major shedding was seen at 5,500 CE and 5,500 CE of 26.75 lakh and 20.6 lakh shares and writing at 5,700 CE of 32.81 lakh shares. Concentration is observed at 5,700 CE of 119 lakh shares.

·         Put Writing: On the other hand, major writing was observed at 5,600 PE and 5,500 PE of 69.56 lakh and 38.63 lakh shares. Concentration is observed at 5,400 PE of 129 lakh shares.

Implications: Call shedding at lower levels and strong put writing at 5,600 and 5,500 levels indicates limited downside for the markets. So expect market to trade in a range of 5,700 and 5,550 for next few trading sessions and wide range of 5,700 and 5,400 for September expiry.

FIIs and DIIs activity in capital market segment
·         FIIs were net buyers of Rs 987 crore with Gross buyers of Rs 3,266 crore and Gross Sellers of Rs 2,278 crore.
·         DIIs were net sellers of Rs 201 crore with Gross buyers of Rs 1,581 crore and Gross sellers of Rs 1,783 crore.

India VIX (Inverse relationship between Nifty and Indian VIX)
·         Volatility for 9th September, 2010 close at 15.92 which is almost flat as compared to previous close, after touching an intraday high of 16.20 and low of 14.94.
Implications: Indian VIX traded in the range of 16 and 14 for the week and closed at around 16 levels. We expect it to move upwards and are Bullish on the same which would have negative impact on Nifty.

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