We expect market to continue its upside momentum on account of shedding of calls and fresh writing of puts where the upside is capped at 5,500 and downside is limited to 5,300 on account of concentration.
Option Analysis
· Call Writing: During the week, shedding in open interest was witnessed at lower strikes with majority at 5,300 of 12.62 lakh shares and writing at higher strikes with maximum at 5,600 strike of 11.94 lakh contracts. Concentration observed at 5,500 of 1 crore contracts.
· Put Writing: On the other hand, fresh writing to the tune of 21 lakh contracts was witnessed at 5,400 strike price. Concentration observed at 5,300 of 88 lakh contracts.
Implications: Call shedding at lower levels and strong put writing at 5,400 levels indicates limited downside for the markets but we do not expect major upside also on account of strong call concentration at 5,400. So expect market to trade in a narrow range of 5,400 and 5,300 for next few trading sessions and wide range of 5,500 and 5,200 for July expiry.
FIIs and DIIs activity in capital market segment
· FIIs were net buyers of Rs 676 crore with Gross buyers of Rs 2,803 crore and Gross Sellers of Rs 2,127 crore.
· DIIs were net sellers of Rs 281 crore with Gross buyers of Rs 1,373 crore and Gross sellers of Rs 1,655 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 16th July, 2010 close at 19.70 which is 2.38% lower as compared to previous close, after touching an intraday high of 20.48 and low of 19.37.
Implications: Indian VIX is trading near its support. We are “Bullish” on the same and expect it to move upwards which would have a negative impact on Nifty.
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