Sunday, January 2, 2011

Market Direction in the New Year

Markets went into New year in good move. Nifty started 2010 at 5200 and ended at 6134 primarily because of global recovery and its impact on domestic recovery (consumption,manufacturing,imports etc..) and Strong FII flows into EM's which gave an 18% Return.

Nifty Started Jan Option Series with a Good move on  Friday. A Lot of PUT Writing Happening at 6000 Levels and can safely say for now that 6000 is good support for the upmove which  started from last week.

Good amount of CALL Writing also happened at 6300 levels which clearly acts as resistance for now. Also on 31st December PCR value is 1.29 for Index Options which indicates a lot of PUT writing happening when compared to CALL writing and NIFTY is in upmove atleast in the near term say for the next 1-2 Weeks.

Another interesting thing in the current series is NIFTY Rollover seen at 61.2 % which is very low compared to previous month of  75 % and rollover numbers say that not many participants are taking the positions which they had in December. But overall JAN Market wide rollover is at 84.5% compared with 85.5% in DEC Rollover and that looks like a good sentiment in contrast to Index Rollover positions.

Once the inflation numbers comes up next week and if that is in uncomfortable range then RBI will be going for Rate Hike which might hamper the sentiment on the street.

Call writing is a branch of options trading strategy involving the selling of call options to earn premiums.
Put writing is a family of options trading strategies that involve the selling of put options to earn premiums.