Markets will be volatile ahead of F&O expiry, support at 2980
December, 23rd 2008
With the global markets demonstrating negative cues and SGX Nifty trading down about 0.68 per cent against previous close suggests
negative opening for the stocks on Tuesday.
Nifty futures open interest increased by 4.22%, while Mini Nifty futures' open interest decreased by 11.04%, as market closed at 3039.30 levels. Nifty December future is trading at par of cash market segment against premium of 4.90 points in previous trading session. While January future is trading at premium of 16.50 points indicating some long rollovers in the contract.
PCR-OI is at 1.46 levels against 1.48 in previous trading session. Due to build up in call options. IV of at the money option is 38%. Historical volatility has reduced from 68.83% to 65.04%.
Stocks which are trading at significant positive cost of carry are FSL, TVSMOTOR, NOIDATOLL, BALLARPUR and GSPL.
FIIs have formed short positions in Index futures. They were net sellers of Rs191cr in cash segment. US market closed down and Asian markets are trading in the red.
"Build up is observed in 3000 put options and 3100 call options of January contract. Market may take support around 2980-3000 levels in today's trading session. We continue to suggest positional trader should avoid formation of short position," said an analyst with local brokerage.
RELIANCE and ICICIBANK showing good built up in open interest in January futures. We believe participants are taking short position in these contracts.
As the expiry nears players were seen unwinding their long positions from 3000 to 2800 strikes of puts. Call writing was observed at 3000 and 3200 strikes while, call buying witnessed at 3100 strike.
"The trend deciding level for the day is 9,999 / 3,059 NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally upto 10,103 / 3,091. However, if NIFTY trades below 9,999 / 3,059 for the first half-an-hour of trade then it may correct up to 9,824 / 3,008," said Amit Chandak, technical analyst with Global One.
Significant rollover is observed in Infosys, L&T, ICICIBank, BHEL and Hindustan Unilever. Stocks which have low rollover are IFCI, Chambal Fertilizers, HDFC Bank, ONGC and LNG Petronet.