Though the FII long-to-short ratio of the index future positions is only at 11, just below the 30-day mean, and FII index future longs are 11% lower than last week, we will take positives from two aspects. One encouraging development was Friday’s 20.2% day-on-day rise in long positions, a trend that could provide a constructive backdrop at the start of the coming week.
More importantly, short positions were 10.25% on Friday and 14% on a week-on-week basis, suggesting that short covering has also started. This appears to be a much clearer shift in FII bias as opposed to mixed signals in the last few weeks.
FMCG, metal and pharma continue to lag
Sector-wise, FMCG, metal and pharma continue to lag, as these are the only major indices still trading below their respective 10-day simple moving averages. On the other hand, IT has taken the lead by moving approximately 3.4% above its 10-day SMA.
Nifty Bank, Media and Oil & Gas also continue to hold comfortably above their own 10-day moving averages by over 1%.
Nifty FMCG: Reversal signs strengthen near critical support
The Nifty FMCG Index is beginning to exhibit encouraging signs of a potential bullish reversal after forming multiple reversal candles around a significant horizontal support zone. The bears’ repeated failure to push the index decisively below this level indicates that buying interest is gradually resurfacing at lower levels, providing a foundation for a possible recovery.
Momentum indicators are also becoming increasingly supportive. The MACD histogram is displaying signs of exhaustion, suggesting that downside momentum is weakening and the recent corrective phase could be approaching its end. Adding to the positive setup, the index has formed a hammer candle on the weekly timeframe near its rising trendline support. This development is particularly noteworthy as the same trendline also represents the lower boundary of a broader triangle formation.
The combination of strong horizontal support, rising trendline support, and improving momentum dynamics enhances the probability of a rebound over the coming weeks. On the charts, the 48,100 area continues to serve as the primary support zone and will remain the critical level to track. As long as the index sustains above this zone, a recovery towards 50,100 appears likely, with the latter acting as the next major resistance level and the initial upside target for the ongoing rebound attempt.
Nifty Metal approaches major support; Reversal potential builds
The Nifty Metal Index continues to move within a broad, widening wedge pattern that has been in place since September 2025. The correction from the pattern’s upper boundary, which began in May 2026, remains intact and has now brought the index close to an important support area near 12,100, where the lower boundary of the pattern is currently positioned.
Although near-term sentiment remains subdued, the ongoing decline appears more like a corrective pullback within a larger structural uptrend rather than the beginning of a fresh bearish phase. Historically, the lower boundary of the widening wedge has consistently attracted meaningful buying interest, and a similar response could emerge once again as the index tests the 12,100 region.
Derivative positioning, however, continues to reflect a cautious undertone. Nearly 70% of the near OTM call strikes have witnessed fresh short build-up, while a comparable proportion of metal stock futures have seen either short additions or long unwinding on a week-on-week basis. This indicates that market participants remain reluctant to initiate aggressive long positions at current levels.
Despite this cautious positioning, the prevailing pessimism could itself become a catalyst for a reversal if support remains intact. From a contrarian perspective, excessive bearishness near a major support zone often creates favourable conditions for a rebound. Traders should therefore keep a close watch on the 12,100 level, as sustained buying interest around this area could pave the way for a recovery toward the upper half of the wedge pattern in the weeks ahead.
About author
The author is Anand James, Chief Market Strategist at Geojit Investments.
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