Nifty trading at premium, higher put writing than calls at lower levels indicates strong support at lower levels especially at 5,400 and major call writing at higher levels indicates less upside. So, we believe markets to trade in a narrow range where the upside is capped at 5,500 and 5,400 maintaining a strong support for near term and 5,300 at lower end for August series.
Option Analysis:
· Call writing: During the week call writing was witnessed between 5,800 and 5,400 where the total outstanding open interest added is 20.61 lakh shares with maximum at 5,600 CE. Whereas call shedding was witnessed at lower strikes with maximum at 5,300 of 1.57 lakh shares. Concentration is being observed at 5,600 CE of 92 lakh shares.
· Put Writing: On the other hand, major fresh writing in puts was observed between 5,500 and 5,400 where the total outstanding open interest added is 71.5 lakh shares with maximum at 5,200 PE. Concentration is being observed at 5,300 PE of 114 lakh shares.
Implications: Strong put writing at lower levels and call writing at higher levels indicates market to trade in a narrow range for next few trading sessions. We believe market to trade in range of 5,500 and 5,400 for intermediate term and 5,600 and 5,300 for August expiry.
FIIs and DIIs activity in capital market segment
· FIIs were net sellers of Rs 50 crore with Gross buyers of Rs 2,452 crore and Gross Sellers of Rs 2,402 crore.
· DIIs were net buyers of Rs 33 crore with Gross buyers of Rs 1,625 crore and Gross sellers of Rs 1,592 crore.
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India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 13th August, 2010 close at 16.74 which is 7% lower as compared to previous close, after touching an intraday high of 18 and low of 15.87.
Implications: Indian VIX plunged by 7% in Friday’s trading session after making a high of 18 during the week. We expect it to move upwards and are Bullish on the same.
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