Nifty 50 (23,398) and Nifty Bank (56,607) declined over the last week and breached some key support levels. The former lost 2.1 per cent whereas the latter was down 1.3 per cent.The chart as well as the derivatives data are now indicating a considerable bear strength and so, further fall is highly likely. Below is an analysis.Nifty 50Nifty (Sept) futures (23,485) lost 2.3 per cent last week. As it fell, the outstanding open interest (OI) of this contract increased 7 per cent over the week to 180 lakh contracts. This indicates short build-up.Not just last week, addition of short positions have been occurring since the beginning of August. The underlying Nifty 50 has dropped from 24,774 on August 3 to 23,398 on September 11. During this time, the cumulative OI (OI of all three futures contracts) shot up from 132 lakh contracts to 219 lakh contracts during this period.While the Put Call Ratio (PCR) of September monthly options stood at 1 on Friday, it had dropped from 1.12 a week ago. This shows traders sold comparatively more call options than put options. This is a sign of weakness as traders will sell calls if they are bearish.The futures and options positioning overall shows that the probability for further decline is high. While the price action also exhibits a bearish inclination, there is a possibility for the September futures to retest the support-turned-resistance 23,750 before the next downswing.Eventually, we expect Nifty futures to drop below the support levels at 23,300 and 23,125. The downtrend is likely to be extended to 22,800. The nearest support below 22,800 is at 22,600.For the outlook to turn positive, Nifty futures ought to surpass 23,750 and see a decisive breakout of 24,000. A rally past 24,000 can lift the contract to 24,250 and subsequently to 24,500.Strategy: For a better risk-reward ratio, rather than shorting Nifty (Sep) futures now at 23,485, traders can sell if it inches up to 23,650. Place initial stop-loss to 23,825.When the contract slips to 23,300 after the trade is initiated, revise the stop-loss to 23,500. Book profits at 23,150.Nifty BankNifty Bank (Sep) futures (56,869) was down 1.6 per cent last week. During this period, the outstanding OI went up 8 per cent to 21.7 lakh contracts. It implies that traders added shorts over the last week.Also, the PCR of September options decreased from 1.03 to 0.91, denoting a greater number of call option selling, a bearish indication.But unlike in Nifty 50, the short build-up started happening in Nifty Bank only since the beginning of this month. Nifty Bank fell from 58,025 on August 31 to 56,607 on September 11, the cumulative OI increased from 21.3 lakh contracts to 24.8 lakh contracts.While the derivatives data suggests a bearish outlook, the chart shows that the Nifty Bank futures rebounded from a support at 56,150 on Friday. However, this is not likely to turn the outlook bullish but can trigger a corrective rally, which can be capped between 57,300 and 57,500.A decline, either from the current level of 56,869 or 57,300-57,500 price band, can take Nifty Bank futures to 55,550. A breach of this can drag the contract lower to 55,000.On the other hand, in case the September futures surpass the resistance at 57,500, the outlook can become bullish, potentially leading to a rally to 58,500 and 59,000.Strategy: Traders can short Nifty Bank (Sept) futures if it moves up to 57,300. Place stop-loss at 57,800. When the contract drops to 56,000, tighten the stop-loss to 56,500. Book profits at 55,600.Published on September 12, 2026