We had gone in last week, optimistic about the continuation of the uptrend, but were not certain about the momentum. As it turned out, there were not many fluctuations, and the week ended with most of the gains intact. Now, let us see if there are challenges that could restrain benchmark indices from crossing record peaks seen last year.
FII index futures continue near record low
Meanwhile, the number of shorts has declined. Though Foreign Institutional Investors’ (FIIs) longs have increased when compared to last week, it is still not even half of what was present closer to the September expiry. This explains why the long-short percentage has improved only marginally to 7.5. This is hardly an optimistic number and is bereft of signals towards short covering possibilities.
Broad market cues
With 68% of Nifty 500 stocks trading above their respective 10-day SMA, there is indeed all-around optimism. This is best reflected in the fact that all of Nifty Bank’s constituents are trading above the 10-day SMA, while 86% of Nifty 50 constituents are trading above this key short-term moving average.
More Nifty stocks are also pushing above their 50-day SMA, pointing to momentum picking up enough to establish a sustainable trend. As opposed to 52% of Nifty 50 stocks above the 50-day SMA the previous Friday, 68% of them closed above last Friday. Meanwhile, Pharma and FMCG index stocks have the fewest constituents still trading under the middle Bollinger Band, pointing to the sectors that are yet to make reasonable headway.
Incidentally, only 40% of the Small Cap Index stocks closed above their 20-day SMA last Friday, affirming that froth is still not yet present, and risk appetite still has room for increase.
Nifty Metal index eyes more gains
The Nifty Metal Index has been on a steady upward path since its recovery began in February 2025, culminating in a record high close this past Friday. The current momentum remains strong, with technical indicators reinforcing a bullish outlook. On the monthly chart, the MACD line is nearing a crossover above the signal line, while the weekly chart reveals a breakout from an inverted Head & Shoulders pattern—both of which suggest strength in the medium term.
From a derivatives perspective, nearly 80% of the near out-of-the-money call option strikes have seen short build-up. This indicates that traders expect a brief consolidation phase in the coming week, which could pave the way for a more robust rally. On the stock-specific front, although JSW Steel continues to lag, other key constituents such as Adani Enterprises, Tata Steel, Hindustan Zinc, Vedanta, Hindalco, Lloyds Metals, and NMDC are showing signs of strengthening. These stocks are likely to drive the index toward the 11,530 level over the medium term, following the anticipated consolidation.
Nifty Financials reversal to continue
The Nifty Financial Services Index has confirmed a strong reversal with a breakout above its downward-sloping trendline, a move that began gaining traction in September. Friday’s session ended with a bullish Marubozu candle, underscoring the strength of the rally. The weekly MACD is also approaching a bullish crossover, adding to the positive momentum.
In the derivatives market, around 40% of near out-of-the-money put options experienced short build-up, while call options at similar levels saw long build-up. This positioning suggests that traders are anticipating further gains in the near term. With banking giants making up nearly 60% of the index and financial leaders like Bajaj Finance, Shriram Finance, and Cholamandalam Finance showing strong upward momentum, the index appears poised to reach the 27,250 mark in the coming sessions.
About author
The author is Anand James, Chief Market Strategist at Geojit Investments.
Disclaimer
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary