In yesterday trading sessions, market have tested their 4.5 month low (5,459) and marginal recovery was seen second half of market. The recovery was mainly on account of a) mixed of short covering and long built-up at lower levels, OI increase by 5% with premium of 25 points and b) overall activity on Put Options was 1.2x the call options. On options front, call options added OI of 44 lacs (70% of overall change) between 5,500 to 5,700 strike price and major PE additions was seen at 5,400 of ~26 lacs. We expect market to bottom out for the near term for currents levels because of PE concentration at 5,500 and 5,400. However, we also do not except any major upside in the market because of call open interest at 5,500 to 5,700 strike price. The strategy to be adopted by an trader would be to initiate fresh Buy at current levels and sell at every rise.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 28th January, 2011 close at 22.6 which is 2.2% lower as compared to previous close, after touching an intraday high of 23.8 and low of 21.7
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