Nifty closed the week under pressure, extending its decline over the preceding sessions and giving up 0.8% from the high recorded on Tuesday. Friday also saw FIIs cutting their index future long exposure by 5.5% to 26,129 contracts, while also boosting their index future short posture by 1.98% to 1,76,187 contracts. This ensured that the long-short ratio slipped to 12.9, tad below the week’s peak.
However, it is important to note that this is still far higher than those witnessed in the last few weeks. In addition, on a week-on-a-week basis, long contracts saw a rise of 5.5%, and a decline in short contracts by 10.98%, which is the lowest weekly close since February 2026.
Meanwhile, all key Nifty sectoral indices have surged past their respective 20 day SMA, except for Financial services, Realty and Energy, with Realty at 25% being the farthest away from the moving average. Only Energy index is below the 50-day moving average, suggesting that the broader market has recovered well.
Among the sectors that have been gaining, autos have travelled the farthest from the 20 DMA, followed by IT and PSU bank. But while the prevailing trend is positive, Friday did see a turn lower in many indices, with only Auto, IT, Metal, PSU bank and Oil & Gas staying above their respective 5-day SMA.
The PSU Bank Index appears to be gradually regaining strength after spending a considerable period in consolidation. On the weekly chart, the MACD is close to forming a bullish crossover, which points to improving medium-term momentum. The daily setup has also turned constructive, with a breakout from a symmetrical triangle pattern suggesting that the earlier uptrend may be attempting to resume.
Derivative positioning adds further support to this positive bias. On Friday, traders were seen covering short positions, while the week-on-week data also points to a visible reduction in bearish bets. In addition, short additions in the near-term out-of-the-money put strikes suggest that participants are becoming more comfortable holding a constructive view on the segment.
The index has managed to hold above important support zones, and momentum indicators are slowly turning higher. If follow-through buying emerges in the coming sessions and the index sustains above the breakout level near 8,650, the PSU Bank Index could extend its upmove towards the 9,050-9,100 zone.
The Nifty Auto Index is nearing an important decision point, as it trades close to the upper boundary of a rising narrowing wedge pattern. Since this structure is generally viewed with caution, the risk of a near-term pullback cannot be ruled out. The RSI is also approaching overbought levels, indicating that the recent upmove may be losing some of its room to extend in the near term.
The derivatives setup remains mixed, but the underlying positioning still tilts modestly in favour of the bulls. Nearly 85% of the near out-of-the-money put strikes saw short additions, while only around 15% of constituents now have an OI PCR below 0.5, compared with 7% earlier.
This indicates that positioning has improved and leaves room for fresh buying interest. Friday’s activity was more balanced, with 45% of stock futures seeing bearish bets, even as nearly 70% recorded week-on-week short covering.
Given the current technical structure, a corrective move towards 27,800 appears to be the more probable outcome over the coming weeks. That said, a decisive breakout and sustained move above the wedge resistance would weaken the bearish setup and could open the way for a move towards 32,000. Within the space, Tata Motors Passenger Vehicles and Maruti Suzuki India continue to show relative strength, while Mahindra & Mahindra looks slightly stretched after its recent run-up.
The author is Anand James, Chief Market Strategist at Geojit Investments.
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