F&O Outlook: Markets in corrective mode

The MACD is a momentum indicator that shows the relationship between two moving price averages. Technically when the MACD falls below the signal line, it is a bearish signal and when it rises above the signal line, the indicator gives a bullish signal. A bullish signal is generated when the KST rises above its moving average. When the KST falls below its moving average, it is a bearish signal.

If the short term RSI, nine days or 14 days, moves above 70, it indicates an overbought situation. The markets usually react downward when the RSI crosses 70.

The derivatives indicators suggest that markets will be in a corrective mode on Tuesday as well. The Nifty futures premium declined to 13 points and despite volumes of 3.45 lakh contracts, only 5000 contracts were carried forward. This indicates traders' unwillingness to carry forward their open positions.

The trading in Call options suggests the support at 5,200 may be breached in the coming days. Call writing was seen at the 5200 strike price and almost one third of the traded contracts were carried forward. The 5000 Put OI accounted for 18.3 per cent of the total Put OI, indicating support at the 5000 level.