Technical and derivative: Markets end the losing streak with weekly gains

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

Jun 01, 2020 08:06 IST India Infoline News Service

Technical
 
Nifty started on a muted note but remained strong during rest of the week. On the weekly chart, the Nifty has moved up higher after a downwards consolidation. Similarly, on the daily chart, the index has moved above a recent consolidation pattern. While both the moves indicate a bullish reversal, the Nifty has reached near its resistance of 9600, which is the starting point of a gap on the daily chart. The weekly RSI is in bullish crossover and rising. On the higher end, price may move towards 9860-10000, if it moves above 9600 decisively. On the lower end support is visible at 9400.

Derivative

Markets ended the losing streak, closing at weekly highs. Across the board buying frenzy was seen in majority of the counters as market breadth shifted in the favour of bulls. Bank Nifty index outperformed the Nifty index by ~6% with both the indices closing the week ~12% and 6% higher, respectively, with major banking heavyweight stocks witnessing short covering. Both the index futures added fresh open interest along with a rise in the underlying price during the opening of the June series, indicating a buildup of long positions. FIIs index future long/short ratio for June has begun at 1.8x level, in the favour of bulls. India VIX index closed the week at 30, down ~7%. On the options front (June 04, 2020 expiry), Nifty and Bank Nifty put options saw heavy option writing as the underlying price trended higher.

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