Today's movement in the market was highly confused, one side fear of bomb blast and other side economic reforms of UPA. Global market was also flat today. But one thing to watch here is Volatility Index of Nifty which moved from 42% to 54%. One can expect high volatility in either direction in next two days before the expire on 31st July.
Volatility Index = 54%
Volatility Index is a measure, of the amount by which an underlying Index is expected to fluctuate, in the near term, (calculated as annualised volatility, denoted in percentage e.g. 20%) based on the order book of the underlying index options.
The best barometer of market fear and greed is the derivatives market. The open interest and the cost of carry at different inflection points give an insight into the psyche of traders.
Markets witnessed some profit booking after a stupendous rally in the past few days. The markets formed a good bottom after the UPA win, with Nifty at 3800 levels and Sensex at 12200-12500 levels. This bottom should hold.
Markets will witness high volatility, ahead of the Reserve Bank of India’s monetary policy review, futures & options expiry for July 2008 series and the monsoon progress. Crude has cooled significantly from $147 levels, forming a double top and it will remain range bound between $105-130 levels in the short term.
All global markets are in an intermediate uptrend. Dow will be weak if it falls below 10,500. We are still in short-term correction mode in long-term structural bull markets. Great buying opportunities exist at current levels for value pickers, apart from trading opportunities. Expect high volatility for this week, with Nifty in the range 4250-4550-4700 and Sensex in 14800-15500.
-HBJ Capital Team
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