Last week bears took complete control and pushed markets to a low breaking 5900 levels momentarily to close the week at 5905, a 3.75% drop over the previous week's close. The magnitude of the fall on friday is quite heavy as Nifty could not get support at 5934 levels and dropped below that.
Overall it is now under bear grip and any bounce towards 5967 levels would attract selling pressure and it is likely that markets would also face a stiff resistance around 6012 levels going forward for this series.
The PCR ratio has dropped below 1 and is at 0.98 which is also starting to favour bears. Last friday options saw hectic activity in all the near strike calls and there has been a significant increase in OI in all the near strike calls of 6000, 6100 and 6200 including that of 5900. 6200 has crossed more than 1 crore mark in OI.
The above points to the fact that the options might have been hugely written on friday and is further favouring bears at this stage. So markets after any consolidation is likely to drop further and test lower levels for the series towards 5750 levels which would offer some support. Any break of 5750 levels would be extremely bearish for the series and might also push markets towards 5500 levels.
As of now, it is a sell as markets near 6000 levels with 6045 being the stop.
Resistance levels : 5949, 6012, 6042
Support levels : 5836, 5790, 5752
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