Current uptrend takes a pause; Nifty, Bank Nifty end the week lower

Let us understand the technical & derivative overview of Nifty over the week and expected trend for the next week.

Dec 08, 2019 07:12 IST India Infoline News Service

Technical View
Nifty has formed a bearish engulfing pattern on the weekly chart, which suggests a possible pause in the current uptrend. On the daily chart, price has formed a lower top, which again signifies waning bullishness in the market trend. The weekly as well daily RSI (14) are having a negative divergence, which indicates an exhaustion in the price momentum. In addition, daily RSI is in bearish crossover and falling. Daily MACD is in bearish crossover and falling. Going forward, Nifty may fall towards 11700, and a further decline below this level can see Nifty drop down into serious correction. On the higher end 12100 is expected to remain as resistance for the Nifty.

Derivative View
Markets witnessed across the board selling pressure in the closing part of the week as both Nifty/ Bank Nifty index closed ~1.1/1.9% lower. Nifty & Bank Nifty indices added heavy open interest throughout the week, consisting of mainly short positions. FIIs index future long/short ratio restarted its lower trend, falling from the 1x mark as the short positions soared higher.  India VIX index closed the week at 13.65, down ~2%. On the options front (December 13, 2019 expiry), Nifty 12000CE is carrying heavy writing positions, making 12,000-mark as the ceiling level for the index in the coming week.

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