After boosting index future longs on Monday to over 60,000 contracts, the highest since April 2026, FIIs (Foreign Institutional Investors) reduced their long positions in the subsequent days to close the week at 29,772 contracts. This is more than 50% reduction. This has come against the run of play, as the Nifty 50 had shown an uptrend through the week.
We believe that this is because speculative long positions built over the previous Friday were squared off after Monday’s gains. Incidentally, short positions were covered by over 4% from Monday’s levels, but this was not enough to lift the long-short ratio of the FII index future portfolio. It sank to 9.6. Meanwhile, most of the key Nifty sectoral indices continued their uptrend. Only the Energy and PSU bank indices stayed below their respective 10-day SMAs.
With these in the background, we have discussed two key sector themes.
Metals eye recovery as key Fibonacci support remains intact
The Nifty Metal Index appears to be approaching a critical turning point after its recent correction toward the 61.8% Fibonacci retracement level near 12,250. This level has so far acted as a strong support zone, helping the index stabilise after a phase of sustained profit booking.
On the weekly chart, the formation of a Doji candlestick reflects market indecision and hints at a potential reversal attempt following the recent decline. Supporting this view, momentum indicators are beginning to show signs of improvement. The MACD histogram has started to contract, indicating that bearish momentum is gradually fading and downside pressure may be losing intensity.
The derivatives data further strengthen the constructive outlook for the metal space. Nearly 80% of the near out-of-the-money (OTM) call strikes witnessed fresh long additions, while several near OTM put strikes saw short additions, suggesting improving trader sentiment and expectations of a potential price recovery.
In addition, most major metal stock futures registered either fresh long buildup or meaningful short covering during Friday’s session, highlighting participants’ willingness to carry bullish exposures into the upcoming trading sessions.
Although the index still requires confirmation through sustained price strength and follow-through buying, the combination of strong Fibonacci support, improving momentum indicators, and favourable derivatives positioning suggests that the recent corrective phase could be nearing its end. As long as the 12,250 support region remains intact, the probability of a rebound remains elevated, with the index potentially advancing toward the 12,900-13,000 zone in the near-term.
Nifty Energy Index: Weakness persists as bears stay in command
The Nifty Energy Index continues to display signs of weakness after breaking below a significant multi-week support area, reinforcing the view that sellers retain control of the broader trend. The technical structure has weakened further following a bearish MACD crossover on the weekly timeframe, a signal that typically reflects deteriorating momentum and increases the likelihood of an extended corrective phase.
Adding to the cautious outlook, the weekly Relative Strength Index (RSI) has declined to around the 40 mark, indicating weakening relative strength without yet entering oversold territory. This suggests that the index still has room for additional downside movement before valuations become technically stretched from a momentum perspective.
In the short term, the index is approaching an important Supertrend support level near 39,080. This zone could provide temporary stability and potentially trigger a relief rally or short-covering bounce. However, despite the possibility of a near-term rebound, the broader technical trend remains fragile.
A decisive breakdown below 39,080 would likely confirm renewed weakness and could accelerate selling pressure, opening the door for a decline toward the 38,500 level and possibly lower support zones thereafter.
Unless the index manages to reclaim and sustain above its recent breakdown area, any upward moves are likely to attract fresh selling interest. Overall, the technical setup continues to favour a cautious approach, with market participants closely monitoring the 39,080 support level as the next key trigger that could determine the near-term direction of the energy sector.