Foreign portfolio investors have turned net buyers in the last five sessions, with net cash market purchases of over ₹21,000 crore.
The FII long-short ratio has increased to 33 per cent which showed that there is short covering trigger in the market, said analysts.
“Despite the ongoing tug-of-war, continuous FPI buying and an improving long-short ratio suggest that the broader trend remains intact, and bulls are poised to regain traction in the forthcoming sessions. With the index hovering near a critical support zone, a buy-on-dips strategy remains favourable, while shallow pullbacks should be expected as sustained buying interest persists,” said Dhupesh Dhameja, Derivatives Analyst, SAMCO Securities.
He added that sustained FPI buying, an improving long-short ratio, and a well-established base at the 200-day EMA indicate that demand remains solid. RSI holds above the 60 mark, and Nifty continues to trade well above its 10-day EMA, hinting at a potential mean reversion or a period of time-based correction.
FPIs sold shares worth over ₹4 lakh crore this fiscal, with outflows of over ₹3.2 lakh crore in the second half. On the other hand, FPIs have been net buyers to the tune of ₹1.4 lakh crore in the debt market.
The focus will now shift towards the quarterly results, which is anticipated to shed light on the recovery in earnings growth. Indicators such as expected rate cuts and rupee movements continue to support the market sentiment.
“Even though the undertone of the market is bullish, the reciprocal tariffs day is looming large and the uncertainty surrounding that is huge. Investors can wait for clarity to emerge regarding the reciprocal tariffs before taking a call on further investment,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investment Services.