Foreign Institutional Investors (FIIs) are currently amplifying their positions in Index Long Futures, with the long ratio climbing to 47.4%—the highest level since early December 2024. This surge raises intriguing questions about the Nifty’s trajectory, especially after a period marked by significant declines. As we progress through April, the Nifty seems poised to challenge its previous peaks set in December. However, recent volatility has sparked debates about the market’s readiness to advance or if reluctance is setting in.

Market Signals and Volatility Trends

Since April 23, the VIX has shown a consistent upward trend, closing at 18.2 on Friday. For context, it began at 13.7 on April 7, before a downward spiral triggered by tariff-related anxieties. Interestingly, while market volatility persists, it hasn’t surged dramatically compared to the previous week. Only 15.6% of the Smallcap 250 Index stocks exhibited a volatility level of at least 10% this week, with 26.8% among small-cap stocks showing similar traits. As the Nifty eyes its previous peaks from 19 weeks ago, around 16% of the NSE 500 stocks have already surpassed those levels, indicating a gradual but cautious market response.

Sector Analysis: Media and CPSE Trends

The Nifty Media Index has faced challenges, declining for a second consecutive week and retracing nearly 50% of the Fibonacci levels from last month. Toward the week’s end, it formed a Dragonfly Doji, with the MACD crossing above the signal line on the hourly chart. This suggests a potential turnaround might be on the horizon. Key players like Sun TV, ZEEL, PVR Inox, and Tips Industries—comprising approximately 62% of the Media Index—are gearing up for a possible rebound, potentially driving the index higher in the coming week.

Conversely, the Nifty CPSE Index has been trading within a narrow range for the last two weeks, forming a pattern resembling a Tweezer Top on the weekly chart. The MACD has crossed below the signal line on the daily chart, hinting at further weakness before any upward momentum can be regained. Major constituents such as ONGC, NHPC, BEL, Coal India, and Oil India have shown reversal patterns, suggesting they may lead the index downward in the short term.

Nifty Outlook: What Lies Ahead?

Recent standard deviation analyses suggest the Nifty could surpass 25,000. The heightened volatility last Friday was partly due to an early strong rally that failed to maintain momentum, resulting in rejection trades. The close near 24,350 echoed patterns seen over the past six days, allowing for optimistic expectations for Monday. However, a drop below 24,280 could signal weakness, requiring confirmation from a break below 23,850 to indicate a potential move towards the 23,670-23,460 range. While the chances of this scenario unfolding appear slim for now, a cautious approach remains advisable.

In summary, as FIIs continue to increase their long positions and the market navigates through volatility, the outlook appears mixed but cautiously optimistic. Investors would do well to stay informed and consider various market signals before making decisions.