Foreign Institutional Investors demonstrated a more positive bias in their index futures positioning during the week, with index futures long contracts increasing by 54% on a week-on-week basis. According to reports from The Financial Express, this trend was not as evident among short positions, which saw a mid-week increase. The week ended with just a 3% decline in short positions, despite a 6% reduction in shorts on Friday. However, in absolute terms, long contracts remain minimal at 39,971 contracts compared to the massive 28,3594 short contracts, with the long-short ratio at 12.4 showing no clear indication of a short covering spree.
The majority of key Nifty sectors have pushed above their respective 10-day SMA following Friday's breakout move, as reported by The Financial Express. However, Energy, metal, oil & gas, and IT sectors continue to lag behind in the technical recovery. The Nifty Energy Index is beginning to exhibit initial stabilisation signals with a long-legged Doji candle formation around current levels, suggesting market indecision and potential exhaustion of selling pressure. The Nifty Metal Index is showing encouraging signs of a technical rebound after retracing into a key support zone, with the emergence of a Morning Star candlestick pattern near horizontal support levels.
According to the analysis from The Financial Express, the Nifty Energy Index is trading just above a key support level of 38,700, which remains critical for maintaining a recovery bias. A short-term relief rally could potentially push the index towards the 39,800 level, which now acts as immediate resistance. The Nifty Metal Index must remain above the crucial support level of 12,600 for the overall setup to stay constructive, with potential recovery towards the 13,150-13,200 zone acting as next resistance band. As long as these support levels are defended, the chances of an upward move improve considerably.
The MACD histogram is steadily contracting in both sectors, reflecting a clear slowdown in bearish momentum, as reported by The Financial Express. This moderation in downside pressure increases the probability of a near-term rebound or reversal. The combination of reversal candlestick patterns and diminishing bearish momentum supports cautiously optimistic views for potential gradual upward moves in the near term. However, any decisive breakdown below the key support levels could invalidate the bullish setup and open the door for further downside pressure.
