Technical
Nifty has formed a bearish engulfing pattern on the weekly chart, which suggests a bearish reversal for the short term. However, the index managed to stay afloat above the rising trend-ine, which earlier acted as the resistance and is now acting as support. As long as the index remains above 11300 we may not witness a sharp sell off in the market. However, decisive move below 11300 may induce sharp fall in the days to come. Weekly RSI is in bullish crossover. On the higher end, Nifty may find resistance at 11870. On the lower end, support is placed at 11300; once 11300 is broken the Nifty may drift down towards 10880.
Derivative
Markets witnessed a sharp selloff throughout the week with Nifty & Bank Nifty index forming a bearish Engulfing & bearish Dark cloud cover candlestick pattern on the weekly chart. Both the indices closed the week ~2.7% and ~6.2% lower, respectively along with an addition of fresh short positions during the closing part of the week. FIIs index future long/short ratio tumbled nearly ~70% from its high of ~3.5x at the start of the September series as FIIs aggressively reduced their long positions in the index futures. India vix index closed the week at 22, up ~20%. On the options front (September 10, 2020 expiry), call option writing was seen in both Nifty & Bank Nifty as the indices trend lower, indicating a sell on rise market scenario for the next week.
