Prashanth
22nd June 2009, 10:01 AM
The Weekly Report For June 22nd - June 26th, 2009
S&P CNX Nifty
After a multi week positive run, Nifty closed in Negative for the first time. While a negative closing had to happen at some point of time, the place where it has happened is a important resistance point.
Previous weeks high of 4693.20 is just above the weekly high of week ended 14.08.2008. The fall from that level and the current rise has given rise to what I believe is a Cup formation which may be the precursor to a Cup and Handle formation.
This week is Derivative Expiry. That day is a important day by other reasons as well. From 27th S&P Nifty will be weighed based on Free Float capitalisation as against Market Capitalisation that has been used till date.
This shall result in changes in weightage of some stocks and since Index funds will have to adjust by selling those that will now have lower weight and buy more of those that will have higher weight, there will be bit of volatility in those stocks and hence on the Nifty itself.
Major changes of weightage are as shown in pic below;
http://i175.photobucket.com/albums/w153/Prash454/NiftyWeightChange.png
This week is also the Derivative Expiry week and hence one has to keep a close eye on the Open Interest in Nifty options which may dictate (mot of time, if not always) where Nifty may close.
Currently, Nifty has max OI in following Call Strikes 4700,4500,4600,4400 and the following Put Strikes 4200,4300,4400,4500.
Based on Max Pain theory, market is unlikely to move sharply higher and neither sharply lower too. We may range btw 4500 on upper and and 4300/4200 on lower side.
Last week, most of the Sectors were in Red with Chemical Sector being the best performing and Airways being the worst.
Short Term Volatility: 38%
Medium Term Volatility: 56%
Long Term Volatility: 60%
While short term volatility has returned to normal levels and this is also indicated by lower Implied Volatility on Options, Longer Volatility is still higher.
Weekly Pivots:
Resistances: 4935 - 4765 - 4540
Supports: 3752 - 3980 - 4150
Suggestion for improvements are appreciated.
S&P CNX Nifty
After a multi week positive run, Nifty closed in Negative for the first time. While a negative closing had to happen at some point of time, the place where it has happened is a important resistance point.
Previous weeks high of 4693.20 is just above the weekly high of week ended 14.08.2008. The fall from that level and the current rise has given rise to what I believe is a Cup formation which may be the precursor to a Cup and Handle formation.
This week is Derivative Expiry. That day is a important day by other reasons as well. From 27th S&P Nifty will be weighed based on Free Float capitalisation as against Market Capitalisation that has been used till date.
This shall result in changes in weightage of some stocks and since Index funds will have to adjust by selling those that will now have lower weight and buy more of those that will have higher weight, there will be bit of volatility in those stocks and hence on the Nifty itself.
Major changes of weightage are as shown in pic below;
http://i175.photobucket.com/albums/w153/Prash454/NiftyWeightChange.png
This week is also the Derivative Expiry week and hence one has to keep a close eye on the Open Interest in Nifty options which may dictate (mot of time, if not always) where Nifty may close.
Currently, Nifty has max OI in following Call Strikes 4700,4500,4600,4400 and the following Put Strikes 4200,4300,4400,4500.
Based on Max Pain theory, market is unlikely to move sharply higher and neither sharply lower too. We may range btw 4500 on upper and and 4300/4200 on lower side.
Last week, most of the Sectors were in Red with Chemical Sector being the best performing and Airways being the worst.
Short Term Volatility: 38%
Medium Term Volatility: 56%
Long Term Volatility: 60%
While short term volatility has returned to normal levels and this is also indicated by lower Implied Volatility on Options, Longer Volatility is still higher.
Weekly Pivots:
Resistances: 4935 - 4765 - 4540
Supports: 3752 - 3980 - 4150
Suggestion for improvements are appreciated.