Bearish undertone may continue

Since the weekly F&O expiry broke the crucial level of 11,000 mark, the NSE Nifty is likely to reel under the pressure for the week ahead (August 5-9). Choppiness was seen across sectors.

However, recovery from lower levels is expected in the long series of August F&O as pullbacks from Nifty lower bands are more likely.

"Overall derivative data indicates short rollover and most of the Nifty August futures positions has been rolled over in the range of 11350 to 11400.

Derivative data indicates bearish scenario to continue. Nifty has multiple resistances at higher levels," observed Dhirender Singh Bisht, senior research analyst (derivatives), at SMC Global Securities.

For the week ended August 2, 2019, BSE Sensex closed at 37,118.22 points, a net drop of 764.57 points, as against 37,882.79 points. Similarly, NSE Nifty too fell 286.95 points to end the week at 10,997.35 points from 11,284.30 points.

"Various resistance are 11100, 11200 spot levels. We will see short buildup and long liquidation on every rise. In the August option contracts, we are seeing maximum options open interest building up in 10,800 puts and 11,100/11,200 calls.

On the technical front, the 10,750-10,800 spot levels are support zone and current down trend is likely to continue towards 10,750-10,800 level," added Bisht.

After reading hours on Friday, the highest Call Open Interest (OI) of 21.48 lakh contracts is at 11,100, while maximum Put OI of 17.07 lakh contracts is at 11,000 level.

"In option data, we have been seeing shifting of range towards lower band. Market Undertone is likely to remain bearish," remarked Bisht.

India VIX moved up by 0.04 per cent to 15.18 level.

Bisht further said that "the Implied Volatility of Calls was up and closed at 13.58 per cent, while that for put options closed at 13.80 per cent.

The Nifty VIX for the week closed at 14.56 per cent and is expected to remain volatile. PCR OI for the week closed at 1.13, which indicates OTM put writing."

Nifty futures closed with a minor gain of 0.04 per cent at 11,019 level. Built-up of long positions was seen stocks such as Tata Global, Voltas, MFSL and TVS Motors.

Bank Nifty

NSE banking index tumbled during the week as it closed at 28,204.95 points, a fall of 1,120.35 points, as against 29,325.30 points.

Analysts said that the banking index was forming long highs and lower lows during the past four sessions.

The banking index suffered its worse week since September 2018. Fresh short positions were formed in the Bank Nifty as OI Rose to 1.8 million shares from 1.4 million shares.