Nifty likely to consolidate at 5150-5300

Nifty ATM IVs have fallen drastically since the Budget and are now trading at sub-18 levels, after trading at close to 30% on the Budget day.
Global equities rally and increased risk-appetite amongst investors led to US VIX making a new 52-week low on March 5, 2010. Traders are facing risk-return dilemma in shorting volatility, as volatility is already trading at exceptionally low levels and there is not much further downside while at same time there is no apparent trigger to induce a spike in volatility.

Nifty VIX is at the lowest level since inception which has led investors to take directional bets through buying of options. Global equities markets could be heading towards a low volatility regime whereby equity indices continue to move higher or consolidate at current levels.

PCR for March series is above 1.7 indicating extreme bullishness in the market. PCR at the 5000 strike for current series is higher than 3.5, while PCR for 5100 strike is less than 1.0 and PCR for higher strikes is well below 0.5. With more unwinding of Call options at 5100 strike and 5200 strike, the Nifty is expected to consolidate at 5150-5300 levels.

IT, metals and oil & gas are witnessing a long build-up, while realty is seeing selling pressure at higher levels. Banking is seeing unwinding of long positions and upside seems to be capped in the short-term.