On Friday, markets bounced back strongly after a solid phase of profit booking on Thursday. Nifty has formed an inside bar candlestick pattern on the daily chart. Going forward, the election verdict day high-low is going to act as crucial pivot points. The 12070 zone will act as an important resistance, while the 11600- 11650 area will behave as vital support for the Nifty.
Bank Nifty, on the other hand, bounced with solid strength, as the index outperformed the Nifty50. The index, similar to the Nifty has formed an inside bar candlestick pattern as well. Going forward, 30300 is the crucial support, while on the upside, important resistance is seen around the 31800 zone. However, one should not ignore the negative RSI and price divergence on the Nifty and the Bank Nifty, which could dent the ongoing momentum.
India VIX closed the week at 16.46, down ~41%, as the implied volatility crashed after the announcement of election results. On the Nifty options front (May 30, 2019 expiry), across the board reduction in option premium was witnessed as the option writers took the centre stage post the election verdict. PCR of Nifty continued to trend around 0.8x level, indicating a continued upward momentum going forward. Nifty 12000CE is the maximum open interest strike carrying a majority of the writing positions, making 12000 levels as an immediate ceiling level for the index.
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