Markets trends higher, but short positions rolled over by FIIs

Nifty started the first day of the week around 22400 and traded within a narrow range throughout the day. The index ended around the opening levels itself, thus forming a small ‘Doji’ candlestick pattern on the daily chart.
 
After a time-wise corrective phase for about a month, our markets resumed positive momentum last week after the GDP data. The rollover in Nifty was in line with its 3-month average while the same was lower than average in the Bank Nifty. We witnessed a long formation on the first day of the new expiry which helped the Nifty index register a new record high. However, FIIs have rolled over short positions and they have only 35 percent of the positions on the long side, while 65 percent of positions are on the short side. The Client section has more long positions with a ‘Long Short Ratio’ of about 57 percent. 
The immediate support is placed around 22200 where the technical short-term moving average support is seen and the open interest in the derivatives segment is highest at 22200 put option. Hence, for the index, one should trade with a buy-on-dip approach while stock-specific opportunities till the supports are intact. It will be crucial to see how the FIIs manage their positions as the markets are trending higher. Any short covering of these positions could lead to a further positive movement towards 22500 followed by 22700. One notable data also was the advance decline ratio in the NSE which was more in favor of declines despite index trading at highs. Thus, one should be very selective in stock picking as well.