The long-short ratio for foreign portfolio investors (FPIs) has declined from 80 per cent to 33 per cent in index futures in the past few days, signaling a reversal in stance from September.
Lofty valuations, tensions in West Asia and “Buy China, Sell India” trade seem to have triggered an exodus of hot money. FPIs have sold over ₹80,000 crore in the cash market in October, a record for any month.
Lower highs, lower lows
“Nifty has been forming a series of lower highs and lower lows over the past three days, indicating bearish momentum will continue. The index is trading below all short-term moving averages and the current price action suggests that further profit booking may occur before the market finds stability at support levels,” said Chandan Taparia, Head, Equity Derivatives & Technicals, Motilal Oswal Financial Services.
On a weekly basis, Nifty fell 0.44 per cent showing intra week selloffs followed by dip buying and recovery for the second consecutive week. The index could face resistance from 25,128 in the near term with 24,568 providing support.
During the week, the market slipped below 50-day simple moving average and breached the crucial support level of 24,900. “Technically, on weekly charts it has formed bearish candle on daily charts it is holding lower top formation, which is largely, negative. We are of the view that, the larger market texture is still in to the weak side but fresh selloff possible only after dismissal of 24,650,” said Amol Athawale, V-P, Technical Research, Kotak Securities.
“Traders are advised to wait for a clear breakout before making aggressive bets in either direction. In the meantime, it’s recommended to focus on stock-specific opportunities, though caution is necessary, as many individual stocks faced sharp declines despite today’s bullish recovery,” added Rajesh Bhosale, Equity Technical Analyst, Angel One.