The volatility index tanks 4% ahead Union Budget: Angel Broking
Derivatives view by Ms. Sneha Seth (Derivatives Analyst, Angel Broking):
"Post positive opening, the benchmark index corrected below 11900 in the early morning trade but soon recovered to rally towards 11950. In the final hour, due to some profit booking concluded the session with marginal gains. The heavy weight counters that supported the index were INDUSINDBK, LT and RELIANCE. On the other side, IT giants like INFOSYS and TCS dragged index lower.
Since last three consecutive sessions, NIFTY has been closing on a positive note. We have seen some fresh long additions during this period in index futures segment; however, the quantum remains insignificant. The Rollovers in the Nifty indicated longs formed in June series are still intact in the system. Meanwhile, we have been consistently observing good amount of writing in index puts since last couple of sessions. Today, 11900 and 11950 put strikes added massive positions and we believe these are again shorts.
One of the key observations ahead the Union Budget 2019, the volatility index has been falling despite an important event is dated this Friday. Today, INDIAVIX was down almost 4%. However, we believe such low implied volatility is indeed a positive indication for near term. Thus, we maintain our optimistic stance on the market and soon expect Nifty to rally beyond the immediate hurdle of 12000."