Implications: Increase in Volatility, futures in discount and higher call writing for consecutive 5th trading sessions imply weakness at current levels. We expect markets to take a strong support at 5,000 levels for intermediate term and 5,300 to act as a resistance for near term and 5,400 for May expiry.
Option Analysis
· Call Writing: Fresh addition of open interest was witnessed across all strike prices. From past few trading session call writing majorly is being witnessed at 5,100 and 5,200 strike prices indicating difficulty for markets to cross these levels. Concentration of open interest stands at 5,300 acting as a major resistance for May expiry.
· Put Writing: In today’s trading session, shedding in open interest was observed at 5,200 and 5,300 strike prices of 3.3 lakh and 2.1 lakh shares with fresh writing at 5,000 strike of 3.9 lakh shares. Concentration of open interest stands at 4,900 strike price of 63 lakh shares.
Implications: More of call writing than put implies that market is facing resistance at every higher level and lack of confidence for any major upside breakout.However, 5,000 is acting as a major support and below that 4,900 whereas upside may be capped to 5,300.
FIIs and DIIs activity in capital market segment
· FIIs were net sellers of Rs 937 crore with Gross buyers of Rs 1,908 crore and Gross Sellers of Rs 2,846 crore.
· DIIs were net buyers of Rs 379 crore with Gross buyers of Rs 1,339 crore and Gross sellers of Rs 959 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 6th May, 2010 close at 24.35 which is 2.8% higher as compared to previous close, after touching an intraday high of 26 and low of 23.1.
Implications: Volatility is making its upward move. We maintain our “Bullish” view on Volatility and expect it to increase to 30 odd levels
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