Foreign Institutional Investors (FIIs) significantly reduced their index future long positions by more than 50% after reaching highs, closing the week at 29,772 contracts according to reports from The Financial Express. This dramatic reduction came after boosting index future longs to over 60,000 contracts on Monday, the highest since April 2026. The long-short ratio of the FII index future portfolio sank to 9.6, while short positions were covered by over 4% from Monday's levels, but this was insufficient to lift the overall ratio. Despite the FII position cuts, most key Nifty sectoral indices continued their uptrend, with only the Energy and PSU bank indices staying below their respective 10-day Simple Moving Averages.
The Nifty Metal Index appears positioned for potential recovery after approaching the 61.8% Fibonacci retracement level near 12,250, which has acted as strong support following sustained profit booking. As reported by The Financial Express, the formation of a Doji candlestick on the weekly chart reflects market indecision and suggests a potential reversal attempt. Momentum indicators are showing improvement, with the MACD histogram contracting, indicating fading bearish momentum and diminishing downside pressure. Derivatives data supports the constructive outlook, as nearly 80% of near out-of-the-money call strikes witnessed fresh long additions, while several near OTM put strikes saw short additions. Major metal stock futures registered fresh long buildup or meaningful short covering during Friday's session, highlighting participant willingness to carry bullish exposures. The recent rally in spot gold, which rose 1.4% and snapped a five-week losing streak, adds to the positive sentiment for metals, with OCBC strategists shifting from cautious to cautiously constructive on gold's prospects.
The Nifty Energy Index maintains weakness after breaking below a significant multi-week support area, with bears retaining control of the broader trend according to The Financial Express analysis. The technical structure has deteriorated following a bearish MACD crossover on the weekly timeframe, while the weekly Relative Strength Index (RSI) has declined to around 40, indicating weakening relative strength without yet entering oversold territory. The index is approaching an important Supertrend support level near 39,080, which could provide temporary stability and potentially trigger a relief rally. However, a decisive breakdown below 39,080 would likely confirm renewed weakness and accelerate selling pressure toward the 38,500 level and lower support zones thereafter.
The combination of strong Fibonacci support at 12,250 and improving momentum indicators for metals suggests the recent corrective phase could be nearing its end, with potential advancement toward the 12,900-13,000 zone in the near-term. For energy stocks, the critical support level at 39,080 remains the key trigger that could determine the sector's direction. The recent softening in US labor market data and cooling inflation trends are reinforcing expectations that the Federal Reserve may have room to ease policy sooner than previously anticipated, which historically benefits non-yielding assets like gold. With traders now pricing in a higher chance of rate cuts by year-end, the technical setup for metals continues to improve, while energy stocks face continued pressure until the sector can reclaim its recent breakdown area.
