Tuesday, August 17, 2010

Markets Today - 16/8/2010

Shedding of put across strike prices and call writing at and above 5,400 indicates less upside from current levels. However, we believe 5,400 to act as a crucial level on account of put concentration and maximum call writing. So, we believe markets to trade in a range where the upside is capped at 5,500 and 5,400 acting as support for near term and 5,300 at lower end for August series.

Option Analysis:
·         Call writing: In today’s trading session, major call writing was witnessed between 5,600 and 5,400 where the total outstanding open interest added is 20.71 lakh shares with maximum at 5,600 CE of 12.54 lakh shares. Concentration is being observed at 5,600 CE of 95 lakh shares.

·         Put Writing: On the other hand, put shedding was witnessed across strike prices. 5,500 PE and 5,400 PE shed maximum in open interest by 9.41 lakh shares and 5 lakh shares. Concentration is being observed at 5,300 PE of 114 lakh shares.
Implications: Put shedding at across strike prices and call writing at and above 5,400 indicates that some weakness could be seen at current levels. However, majority outstanding open interest at and below 5,400 indicates strong support at lower levels with 5,400 acting as a crucial level. So we expect markets to trade in range of 5,600 and 5,300 for August expiry on account of concentration.
FIIs and DIIs activity in capital market segment
·         FIIs were net buyers of Rs 400 crore with Gross buyers of Rs 2,753 crore and Gross Sellers of Rs 2,353 crore.
·         DIIs were net sellers of Rs 433 crore with Gross buyers of Rs 1,168 crore and Gross sellers of Rs 1,602 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
·         Volatility for 16th August, 2010 close at 18.11 which is 8.18% higher as compared to previous close, after touching an intraday high of 18.32 and low of 15.8.
Implications: Indian VIX surged by 8% in today’s trading session and closed near the high. We expect it to move upwards and are Bullish on the same.

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