Why Higher Volatility at NSE BSE in Coming Week?

1. As we have suggested a successful straddle strategy for trading in options market in coming month series; it makes sense to understand this fact that coming week as well as month will see heightened volatility in the market. The main reason for enhanced volatility is that it being a derivatives contracts expiry week for for June 2009 as the said series expire on Thursday, 25 June, 2009.

2. Another main reason for the enhanced volatility is plans of National Stock Exchange (NSE) to go for free-float market capitalisation method to calculate its benchmark indices wef 26 June, 2009 instead of the existing full-float method. Hence, it can result in increased volatility as % Weight of public sector undertakings like PSU Navratna ONGC, NTPC, SAIL, PowerGrid Corporation and National Aluminium Co will come down by at least 50% with the index going free float.

3. Please note that Nifty 4200 is seeing maximum Put writing activity as on last Friday alone 4200 put has seen an addition of over 9 lakh shares.


3. Globally one needs to keep an eye on US existing and new home sales data, US GDP QoQ (Annualised) and US initial jobless claims in the coming weeks which will provide the cues for the market.

Click Here to Get Future Trend of BSE and NSE in Email Every day