Nifty futures trading at premium to spot. Major put writing at 5,300 would act as major support and call writing at higher levels with less put writing indicates stiff resistance at higher levels. We expect volatility to bounce from current levels which would have a negative impact on Nifty. The broad range for August series is 5,600 and 5,300; we expect market to trade in this range.
Option Analysis:
· Call writing: During the week, major addition in open interest was witnessed at 5,600 CE and 5,500 CE strike prices of 33 lakh shares and 34 lakh shares respectively. Concentration is observed at 5,600 CE of 68 lakh shares.
· Put Writing: On the other hand, addition in open interest was witnessed at lower strikes with majority at 5,300 PE of 37 lakh shares. Concentration is observed at 5,300 PE of 75.6 lakh shares
Implications: Put writing at lower levels with majority at 5,300 indicates Nifty has strong support at lower levels. However, Nifty faces major resistance at higher levels on account of low put writing and expect that 5,400 would act as crucial level on the upside. The wide range for Nifty for August series is 5,600 and 5,300 on account of concentration.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 30th July, 2010 close at 18.94 which is 3.33% lower as compared to previous close, after touching an intraday high of 19.23 and low of 16.25.
Implications: Indian VIX surged in today’s trading session and we expect it to move upwards and are Bullish on the same which would have negative effect on Nifty
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