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Reversal expected in Indices as Put premiums failed to appreciate…
Commentary:
Uncertainty has triggered sharp volatility in recent days where Nifty is witnessing a move of over 200 points daily. Stock specific actions continued where metal, gas and power related stocks remained in focus whereas supportive action are intact in other heavyweights.
Major Option activity (main expiry):
Major Call OI change in today’s session: 16500 (6.2 lakh), 16600 (23.7 lakh) and 16700 (15.8 lakh)
Major Put OI change in today’s session: 16600 (22.9 lakh) and 16500 (16.7 lakh).
Outlook:
The Nifty started the week on an optimistic note but due to global uncertainty and taking cues from global indices it opened gap down today. However, since morning there was good OI blocks in Puts. Despite a sharp sell-off and huge additions in Puts, premiums failed to move higher. OTM Puts premiums declined almost 30-35% since morning trades. Even volatility benchmark index – India VIX failed to move higher and is up by only 3%. We feel there will be limited downside in today’s session from here and sizeable Put OI of 16500 remain important support zone. The only issue is banking stocks are not performing and since few sessions it has relatively under performed. Once the covering start in the banking space, Nifty would be able to surpass 16800 levels. However, a move towards 16800 cannot be ruled out in couple of sessions. Hence, we advise avoiding any aggressive shorts at current levels and remaining long for upside target of 16800.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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