In the last week we have seen sharp selling in the Indian indices. Nifty index failed to surpass its 50-day EMA, crucial hurdle of 11,657 zone and witnessed sharp decline to 11,300 level. Index has recently broken its major rising trend line in weekly and daily scale and also broken its previous swing low support of 11,461 zone. Now till it remain below 11,420-11,461 weakness could continue in the Indian markets and Nifty could drift towards 11,250-11,200 level.
We have seen formation of negative price pattern and mechanical indicator also given sell signal on the crossover, so till it remain below the immediate resistance zone, weakness could continue and index could drift towards low levels.
Looking at the option database, we are heading towards monthly expiry and maximum put OI at 11,300. We have seen significant change in OI congestion, maximum Call OI shifted from 12,000 to 11,700 and now 11,600-11,500 which clearly indicates that resistance shifting lower and hold below 11,300 could force Put unwinding which may drag to 11,250-11,200 zone. So till it remain below 11,420-11,461 weakness could continue in the Nifty index.
