Decrease in Nifty future premium to spot, higher activity in calls than put and shedding in put options in in-the-money strike prices indicates weakness and selling pressure to be observed at higher levels. However, we feel Nifty to bounce back and take support at 5,900 for the November series on account of put concentration.
Option Analysis:
· Call writing: During the week, major writing was witnessed between 6,200 CE and 5,900 CE where the total outstanding open interest added is 108.65 lakhs shares. Maximum writing was seen at 6,000 CE and 5,900 CE which added ~40 lakh shares each. Concentration is witnessed at 6,200 CE of 79 lakh shares.
· Put Writing: On the other hand, major writing in put was seen at 5,900 PE and 5,800 PE by 15 lakh and 10 lakh shares and maximum shedding at in-the-money strikes. Major shedding was witnessed between 6,300 PE and 6,000 PE where the total outstanding open interest shed was 98.8 lakh shares. Concentration is witnessed at 5,900 PE of 69 lakh shares.
Implications: Higher activity in calls than put and shedding in put options in in-the-money strike prices indicates weakness and selling pressure to be observed at higher levels. However, we feel Nifty to bounce back and take support at 5,900 for the November series on account of put concentration.
FIIs and DIIs activity in capital market segment
· FIIs were net buyers of Rs 367 crore with Gross buyers of Rs 3,926 crore and Gross Sellers of Rs 3,558 crore.
· DIIs were net buyers of Rs 300 crore with Gross buyers of Rs 1,697 crore and Gross sellers of Rs 1,397 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 19th November, 2010 close at 21.6 which is 4.75% higher as compared to previous close, after touching an intraday high of 21.9 and low of 18.4.
Implications: Indian VIX traded in the range of 22 to 17 during the week and thereby closed at 21 levels. We expect it to move upwards and are Bullish on the same which would have negative impact on Nifty.
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