The weekly performance of the Nifty 50 (17,531) and the Nifty Bank (40,777) was divergent — the former lost 1.7 per cent, whereas the latter gained 0.9 per cent over the past week. While this can paint a different picture, the overall inclination appears same.

Both the indices, which witnessed significant unwinding of longs on futures contract in the second half of August, saw fresh buyers coming in. For the past three weeks, the Nifty 50 and the Nifty Bank have been seeing long build-ups.

However, towards the end of last week, buyers seem to have made an exit as the cumulative Open Interest (OI) of the futures contract of both indices declined. The option chain of the nearest weekly expiry of both indices shows more call writing than put writing, keeping the Put-Call Ratio (PCR) considerably lower. This gives a bearish bias.

This has coincided with both the indices facing the resistance, against which they fell. That is, the Nifty 50 and the Nifty Bank met with barriers at 18,000 and 41,000 respectively last week.

The above factors indicate that both the indices will most probably see a decline from here.

But the Nifty 50 has a support at 17,000 and the Nifty Bank has one at 40,000. The 17,000-strike put option of Nifty 50 and the 40,000-strike put option of Nifty Bank have seen a good amount of writing as well.

So, although the overall bias seems to be turning bearish, one may opt to wait until the above-mentioned supports are breached before initiating fresh short positions.

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