While the low reading suggests weakness in the market, a bottom-out trend is harbinger of a turnaround.
The rebound in the Nifty on Tuesday after a sharp fall on the Budget day may sustain in the near-term going by the trend in the long-short ratio of foreign portfolio investors (FPIs). The ratio dropped to 0.3 in the current derivatives series, a rare reading in the past seven years indicating a bottom.
While the low reading suggests weakness in the market, a bottom-out trend is harbinger of a turnaround. In the past two occasions since 2012 (totalling 15 sessions), when the ratio touched 0.3, the indices bounced by over 5 per cent in the following month.
Neeraj Agarwal, VP at Antique Broking, said they expect ‘buy on dip’ strategy for the Nifty with likely target of 12,900-13,000 level. “There is a minor gap prevailing in the Nifty at around 11,920 levels. Historically, the index tends to fill the gap before staging a sustained reversal in the price movement”, he added.
