Nifty ends the week with highest ever monthly gains

Technical View

Nifty ended the week with a gain after three consecutive muted shows on the weekly timeframe. On the weekly chart, Nifty has posted a gain backed by rise in volume, which suggests long build up during the week. The index has given a breakout above its previous swing high on the weekly chart, which indicates rising bullishness in the market. 

The Weekly RSI (14) is in bullish crossover and rising. On the monthly chart, the index has given highest ever monthly close. The medium term outlook is clearly bullish and Nifty may move towards higher levels over the medium term. However, on the daily frame, Nifty has been showing some exhaustion which may trigger a quick correction. 

Going forward, Nifty may fall towards 11900; Moreover, if it declines below 11900 levels, further correction towards 11700 can be expected over the next week. On the higher end 12200 is expected to remain as resistance for the Nifty.

Derivative Indicators

Markets finally broke out from a narrow range of past three weeks with both Nifty/ Bank Nifty index closing ~1.19/2.7% higher. Nifty successfully negated a rare bearish doji tri-star candlestick pattern on the weekly chart, indicating a resumption of fresh upward momentum. 

Rollovers of Bank Nifty were higher than its previous series while the rollovers of Nifty were inline with its previous series. FIIs index future long/short ratio surged above the 1x mark backed by short covering. India VIX index closed the week at 13.9, down ~7%. 

On the options front (December 25, 2019 expiry), Nifty 12000PE is carrying heavy writing positions, making 12000 mark as the floor level for the index in the coming week.

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