Nifty ended just above the previous consolidation high on the weekly chart, which is a bullish setup. However, it failed to sustain above 11400, which is a crucial level for the next leg of the rally. Weekly RSI has been in a positive crossover. On the higher end, Nifty may continue to find resistance at 11400; a sustained trade above 11400 may induce further rally in the market. On the lower end, immediate support is placed at 10880; below which price may fall towards 10550 over the short term.
Derivative
Markets witnessed the highest weekly close since March 2020 as across the board buying frenzy weighted in. Nifty and Bank Nifty closed the week ~1.75% and ~3% higher, respectively, with major banking heavyweights making a comeback. Both the index futures saw the addition of long positions during the week. FIIs index future long/short ratio continued to trend above the 1x level for the major part of the week as FIIs gradually added long positions & reduced their short positions in the index futures. India Vix index closed the week at 19.7, down ~9%. On the options front (August 27, 2020 expiry), option writers took the centre stage as both Nifty & Bank Nifty out of the money options added writing positions on account of the underlying price trading in a narrow range and the implied volatility trending lower.
