The proportion of longs in the FII Index Future portfolio stayed above 20 through the week. The reason that this figure did not rise significantly enough, as warranted by a sharp rise in the Nifty index, is that longs were cut by 16% through the week to end at the lowest point of the week at 68,019 contracts.
However, short positions were covered through the week, which is more significant for now, as the shorts are nearly 4 times the long positions. Friday closed with FIIs’ index future short positions at 2,58,972 contracts, having declined nearly 10% from previous Friday’s levels.
SMIDs gaining momentum
Last week’s rallies have lifted broad market optimism, as is evident from most of the sectoral indices clearing the 50-day SMA. Only a few indices, like financial services, Oil & Gas, etc., are yet to push above this benchmark meaningfully.
What is more striking is that even as Nifty is more than 3% below its 200-day SMA, the Nifty midcap 150 index is almost 2% above this benchmark, while the Small- cap 100 index is very close to its 200-day SMA. This suggests that the risk appetite has improved substantially.
Nifty FMCG: Recovery gains traction as technicals and derivatives converge
The Nifty FMCG Index has staged a strong rebound from the critical 45,500-46,000 support region, printing a bullish engulfing pattern on the daily timeframe, which signals a potential trend reversal.
The index has successfully moved back above its short-term moving averages and is now testing the lower boundary of the Ichimoku cloud near the 49,000 mark, indicating a gradual improvement in overall trend strength.
Momentum indicators continue to lend support to the upside bias, with the MACD shifting into positive territory and the RSI rebounding convincingly from oversold levels, highlighting renewed buying interest. Derivative positioning further reinforces the bullish outlook, as nearly 70% of near OTM put strikes have seen fresh short additions, while a majority of FMCG stock futures have recorded either new long positions or short covering on a week-on-week basis.
This suggests that traders are increasingly positioning for further upside potential. Immediate resistance is observed in the 50,800-51,200 zone, and a decisive breakout above this band could pave the way for a move towards 52,500. Key support is placed at 48,800-48,500. Overall, the bias remains cautiously bullish as long as these support levels continue to hold.
Realty Index: Positive structure intact with buy-on-dips strategy favoured
The Nifty Realty Index continues to exhibit a constructive technical setup, even as some short-term signs of exhaustion start to emerge. On the daily chart, a MACD exhaustion candle has formed, suggesting the possibility of near-term profit booking or sideways consolidation during the early part of the coming week.
That said, the broader structural trend remains firmly positive. From a weekly perspective, the MACD is approaching a bullish signal crossover, while price action is nearing a potential Supertrend breakout – both of which point towards strengthening medium-term momentum.
Derivative indicators further validate the bullish bias, with roughly 66% of near OTM put strikes witnessing short additions, and nearly 80% of stock futures seeing short covering on Friday alone. On a week-on-week basis, most Realty futures have registered either fresh long additions or sustained short covering, reflecting a clearly positive trader outlook.
Any near-term dips arising from profit booking are likely to present attractive buy-on-dips opportunities, targeting levels around 860, provided the crucial support at 725 remains intact.
First published in Financial Express.
