FIIs start January series with 70 percent long positions

The New Year 2024 started positively for our markets as the Nifty index registered a record high above the 21800 mark. However, it gave up the intraday gains towards the end and closed just below 21750 on a flat note.

Nifty has started the New Year on an optimistic note, but the RSI readings on the index are in the overbought zone. FII’s have started the January series with around 70 percent long positions. If we look at the historical data, then their positions are seen as overbought when this ratio reached 70 to 75 percent. This ratio was around 70 percent during the July’23 peak, 75 percent during the December ’22 peak, and 75 percent during the April ’22 peak. Hence, although the trend remains positive, the technical readings are overbought and the FIIs long short ratio too has reached the peak end. However, it is not advisable to go against the trend as it is often seen that the up move could continue with in-between hiccups when the trend is solid. But traders should now avoid aggressive longs here and look for profit booking at higher levels. In the options segment, 21700 put for the weekly series has the highest open interest and one should keep a close tab on the change in open interest there as the index has just closed above the same. Any unwinding of positions here could hint at a possible minor correction. The immediate support for the Nifty is placed around 21600 followed by 21500 while on the higher side, the retracement resistance is around 21970-22000 zone.