Nifty (January) futures’ premium declined significantly by 15 to 9 points and 5.3 lakh shares got added in open interest. Increase in open interest with price and premium decline implies fresh shorting in the market. Consecutive fourth trading sessions of the week we have observed more activity towards CE Vs PE. In similar period, Nifty CE added 180 lakh shares in open interest, while put options added 7.9 lakh shares. As expected market has corrected from 6200, now we expect recovery from 5,850 to 6,000. Recovery is expected on back of a) More PE writing than CE at lower levels and b) PE concentration at 5,800. The strategy to be adopted by traders should be to initiate fresh buy at 5,850-5,870 and to book profit at 6,000.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 7th January, 2011 close at 20.8 which is 14.4% higher as compared to previous close, after touching an intraday high of 20.9 and low of 17.6
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