The holiday truncated week got off to a bad start on August 12, amid weak global cues and domestic slowdown worries. However, we saw some respite on August 14 as the Sensex rallied more than 350 points. Nifty too closed above the psychological 11,000 mark.
Earlier this week, the Nifty reversed from its 200-days moving average, which stands at 11,667 levels, and falling resistance trend line connecting the highs of 11,982 and 11,707, reaffirming the downtrend.
For the rally to sustain, the index needs to close above 11,150-11,181 on a sustainable basis for any bounce back towards 11,350 levels.
On the downside, the market has critical support placed at 10,782, which is the 61.8 percent Fibonacci retracement of the entire rise from 10,005 to 12,103.
If the index breaks below 10,782, a further decline can be seen towards 10,580 levels. In Nifty options, maximum Put open interest is seen at the 11,000 strike, followed by 10,700. Maximum call open interest is seen at 11,000, followed by 11,500.