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The long-short ratio in index futures – a measure of the number of bearish versus bullish positions – held 12% of foreign investors on Monday, the lowest in two years. Low readings mean that foreign investors are going through a bearish phase. The previous low was 12.4% on February 28, 2020, when there were concerns over the spread of covid Had broken.
shows the ratio FPI there is a severe recession Market at 88%, and long positions at 12%. Some analysts said an excessive reading in the ratio could be an indicator of a short-term bounce.
agenciesChandan said, “A falling ratio clearly indicates negative market setup, but at the same time, a very low ratio also indicates excessive pessimism, which can turn into short covering if there is a small positive trigger from the global or domestic market. could.” Technical Analyst. “The outlook remains bearish, but too much downside in the ratio can be considered as an oversold scenario. Hence, the situation should be lightened accordingly, although the market outlook is negative.”
Foreign Portfolio Investors (FPIs) have been selling Indian shares continuously for the last nine months. Their sales have reached Rs 2.2 lakh crore since October 1, 2021. FPIs have sold Indian shares worth around Rs 1.9 lakh crore so far this calendar year.
Siddharth Bhamre, Head of Research
Broking said the long-short ratio of FPIs clearly suggests that their short-term bias is largely negative, but in the past, the market has bounced back in the short term in such situations. When the ratio fell to 16.9 per cent on May 12, the market had a quick rebound. within two weeks, nifty The index jumped 850 points, or 5.5%, to 16,661 from 15,808 on May 30, 2022. Since then, the market is down 929 points or 5.6% to close at 15,732 on Tuesday.
FPIs on Monday reduced around 17,000 long contracts (bullish positions) in index futures while increased 34,000 contracts in shorts (bearish positions).
“Generally, lower readings indicate support for the market and a bounce off key support levels,” said Rajesh Palviya, Head of Technical and Derivatives, Axis Securities. “However, this time around, markets not holding critical support levels indicate a possibility of further downside. irrigated Outcomes and concerns over global inflation amid ongoing geopolitical tensions.”
Nifty has broken its May low of 15,735 and made a new low near 15,650 zone, while Bank Nifty still remains at 33,000 zone low.
“The market is in an important support zone around 15,700-15,600,” said technical analyst Nagraj Shetty.
securities. “However, the inability of the bulls to show any significant upside recovery from the key support indicates that another leg below the 15,600-15,500 level is likely before showing any significant upside bounce from the lows.”
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