FPIs trim bearish bets, but no rush to buy yet

Over the past month, foreign portfolio investors (FPIs) have reduced their bearish derivative positions in India, moving away from the record lows observed in January. This shift reflects a slight easing of pessimism regarding market prospects, although investors remain cautious and have retained a significant portion of their bearish bets. The Long-Short Ratio, which compares the number of traders betting on price increases to those betting on decreases, has improved from 7.5% to 19.4%. However, recent volatility in the US tech sector, particularly concerning artificial intelligence developments, has led to renewed bearish sentiment among FPIs. Notably, the Nifty index saw a decline of 1.3% on Friday, closing at 25,471, with the Nifty IT index experiencing an 8.2% drop over the week. Analysts suggest that while FPIs have covered some short positions and invested in index futures, the overall market momentum remains weak. Expectations indicate that the Nifty will oscillate between 24,500 and 26,300 in the near term, as global economic uncertainties continue to overshadow local market dynamics.