Nifty99000 100%

Sensex99000 100%

Exclusive

Correction Likely Amid Rising Volatility

Author: Dhirender Singh Bisht/Wednesday, October 21, 2020/Categories: Exclusive

Rate this article:
4.8
Correction Likely Amid Rising Volatility

After taking a resistance at 12,000 level, the NSE Nifty took a dip and bounced back. Banking stocks are in focus and seen buying interest whereas pharam stocks are under pressure and continue to show weakness. Call writers are more aggressive than Put writers in current week and monthly expiry. The 12,000 strike Call and 12,500 strike Call seen a good writing as compared to other strikes, whereas on Put side, Put writers are more active at 11,500 strike. The VIX is trading in its upper range around 22.69, which indicates a sign of rise in volatility. The Implied Volatility (IV) gap between Calls and Puts is normal, which indicates that option writers can write either side options or both side. If there is any rise in volatility in coming session then chance of fall in the market is quite high as there is a high inverse correlation between volatility and index. The inverse correlation means that when volatility rises then chances are high that market will record a fall whereas on the other side if volatility takes a dip then the market will take a bounce. 

Nifty on Tuesday (October 20) closed at 11,896.80 points, up by 0.2 per cent, and Bank Nifty at 24,311.80 points, a net rise of 0.19 per cent. The Nifty straddle (Oct 22 expiry) on Tuesday closed at 160 level near to the previous week, indicates that the option seller are comfortable in the price movement of +/-160 from current level. These are the levels where the option sellers are comfortable on their sold position in straddle. The option pain for Nifty in current week is at 11,900 level whereas for monthly is at 11,700. The option pain for Bank Nifty in current week and next week is at 24,000 level whereas for monthly is at 23,500. Going forward the market is likely to take support around 11,700-11,650 zone and on upside 12,000 will act as resistance. There is an early sign of rising in volatility in coming week. The stock-specific movement can be expected with wide range.

The writer is a senior research analyst (derivatives) at SMC Global Securities Ltd

Print

Number of views (201)/Comments (0)

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free