Markets ended the week with smart gains as benchmark index Nifty has closed higher for the sixth consecutive session. On the daily chart, the Nifty has moved above its previous swing high, which is a bullish set up. Besides, Nifty so far has remained above the breakout point, which indicates that the bulls are not ready to give away the grip on the market.
In addition, Nifty has been able to hold above the previous consolidation highs on the daily chart. The current set up is poised to form an "N" shaped rally as long as 11090 is protected. On the higher end, overhead resistance is placed at 11695, which is previous swing high. Decisive breakout above 11700 is likely to induce more steep rallies in the market.
Bank Nifty has moved above previous swing high on the daily chart. The rise in price was backed by decent increase in volume. Also, after the recent rally the bank index has moved above 38.20% Fibonacci retracement level, which is an early sign of bullish reversal. The trend is likely to remain bullish as long as Bank Nifty is closing above 28800 on the higher end it may move towards 29800 and higher over the short term.
Derivative indicators
Markets witnessed a strong up-move throughout the week with both Nifty & Bank Nifty indices closing at weekly high level. Across the board long positions were added in both the indices as open positions soared higher along with a sharp surge in the underlying price.
Bank Nifty index marginally outperformed the Nifty index by 0.6%. FIIs long/short ratio in the index future also trended higher on account of unwinding of short positions and marginal addition of long positions. Metal stocks, which have been carrying short positions since the start of the October series, are witnessing short covering in the last two trading session, indicating a continued upward momentum going into the next week.
India VIX index closed ~7% lower at 15.9. On the options front (October 24, 2019 expiry), Nifty 11500PE is the maximum open interest strike carrying writing positions, making 11500 level as a floor for the index in the coming week.
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