NIFTY DEFENDS 23,000: FII SHORT COVERING COULD HOLD THE KEY TO A REBOUND

Broader markets remained sideways last week where the major indices like Nifty, Bank Nifty closed with nominal loss of 0.22% & 0.44% respectively. Meanwhile India Vix also cooled off as much as 7.32% which denotes a possible retreat could possibly be seen in the coming week ahead. The key institutional shift of data denotes Retails is still not giving up their long positions while FII’s possible on the saturation level of shorts. Where FII’s have hit 2.90 lacs on Thursday last week & now at 2.88 lacs shorts(Possibly big saturation levels are here) while Retail has also reached its possible saturation levels to hold longs at 2.41 lacs while Pro & DII’s has reduced their longs to 34k & 13k contracts almost in last week. We expect once Retails starts to wind up its longs & FII’s starts to cover the shorts the market may bottom-out & strong upward momentum may emerger which may take an immediate target towards 24300 kind of levels.

FII’s have been very volatile since last 2 years where major selling has been done by them. After recent last 1 month time frame the FII’s has initiated their buy in Financial Services sector, Healthcare, Consumer Services Sector & IT Sector they have once again showed some changes as they have shorted in Financial Sector. Here we can have a brief look on the major inflow & outflow sector wise:

For overall scenario to consider we have below mentioned factors which created havoc & high volatility into the broader markets with the US-Iran war escalating further. Rupee, crude oil, Dollar Index, etc. Let’s dig it out one by one:

1. Rupee: Rupee may climb upward towards 95 in coming weeks ahead.
2. Dollar Index: In DXY we remain neutral as of now.
3. Brent Crude oil: In Brent crude oil as earlier anticipated to hit 90$ from 110$ so far it has hit 101.53 we continue to expect it to hit 90$ per barrel in coming week ahead. Any slight positive news could do the stance.
4. FII’s Remained Covering Shorts: FII’s net longs & shorts now have once again shown drastic changes where net longs stand near to 10% while net shorts now remain at 2.88 lacs contacts. We expect a saturation in this data & a trend reversal in the Index from Net longs of 7-8% & Net shorts from 2.50-2.82 lacs contracts in the coming week itself.

Nifty on weekly charts formed Hammer candle on Weekly charts with a decisive close above 23000 looks good in the coming week ahead. FII’s have hit 2.90 lacs on Thursday last week & now at 2.88 lacs shorts(Possibly big saturation levels are here) while Retail has also reached its possible saturation levels to hold longs at 2.41 lacs while Pro & DII’s has reduced their longs to 34k & 13k contracts almost in last week. We expect once Retails starts to wind up its longs & FII’s starts to cover the shorts the market may bottom-out & strong upward momentum may emerger which may take an immediate target towards 24300 kind of levels while crucial supports now lying within the bigger range of 22800-23200. This time major movement could get triggered by Banking & Financials Sector followed by IT & Consumer Durables goods sector.

However, Bank Nifty may show us an immediate crucial support of 55000-55700 kind of levels while immediate potential upside remains at 58000-58700 & any close above this could trigger a move towards 60000-61000 kind of levels in September series itself. The support may come from large-cap Private Sector banks.

“Nifty IT” sector has shown immense response by FII’s with consistent buying in last 45 days we expect an immediate target of 32000-33000 while crucial support still remains at 28000-29000 this time.

In Brent crude oil as earlier anticipated to hit 90$ from 110$ so far it has hit 101.53 we continue to expect it to hit 90$ per barrel in coming week ahead. Any slight positive news could do the stance.

India remained on the higher ground on GDP data front where it achieved a milestone with historic growth rate of 7.80% in Q1, 8.20% in Q2 & 7.80% in Q3 of FY 25-26 completely mocking Trump’s “Dead Economy” jibe at its face where India remained on the Top-notch developing economy set for a target of $25 Trillion economy by 2047 on track. However, chairman of Reliance Industries Limited Mr. Mukesh Ambani said in its latest AGM last week that India has the capacity to achieve 10% GDP growth annually which once again has set another long-lasting futuristic goal for the entire economy.

FII & DII’s monthly data so far in the FY 2026-27 has been interesting where FII’s bought in few months initially then abstain from buying or remained to being on the sell side while DII’s remained the biggest supporter of the broader markets. The data below mentioned:

The Indian Equity markets have gained many recent news item where major of the news items are mentioned below:

1. Rupee: Rupee may climb upward towards 95 in coming weeks ahead.
2. Dollar Index: In DXY we remain neutral as of now.
3. Brent Crude oil: In Brent crude oil as earlier anticipated to hit 90$ from 110$ so far it has hit 101.53 we continue to expect it to hit 90$ per barrel in coming week ahead. Any slight positive news could do the stance.
4. On the other side FII’s net longs now near to 9-10% & a recovery is possible towards 17% followed by 27% till the coming weekend which continuously signifies & now support could be at 22800-23200 in Nifty.

In the wholesome broader markets witnessed some key events & their outcomes last week which are described as follows:

Domestic News:

1. RBI says FCNR(B)-linked PSL exemptions will apply only to deposits mobilized until August 31.
2. Oil prices remain a focal point as Brent crude hovers near high levels following West Asian tensions, regional tanker attacks, and Houthi forces reaching key islands near vital shipping lanes like the Bab el-Mandeb Strait.
3. Major global technology discussions highlight India’s push for AI infrastructure, with commerce officials holding talks with Microsoft regarding local cloud and GPU capabilities.
4. Private Equity and Venture Capital investments rose sharply in August to $3.3 billion across 99 deals (up 55% year-on-year from $2.14 billion), heavily driven by mega-deals such as Alpha Alternatives’ $787 million road asset acquisition.
5. PM Modi urged BRICS member nations to cut trade barriers and turn their growing economic weight into stronger business and investment ties.
6. Finance Minister Nirmal Sitharaman called for stronger safeguards around AI to prevent risks without stifling industry innovation.
7. Reports emerged regarding an oil pipeline hit by drones launched from Iraq, according to Saudi updates, amidst the ongoing US-Iran conflict news.
8. Reports surfaced that PlayStation dropped Hideo Kojima’s project Physint over budget concerns and missed deadlines, with Xbox subsequently picking up publishing duties.
9. Donald Trump brushed aside warnings from researchers about potential human extinction risks from advanced AI, emphasizing that his main focus is ensuring the U.S. keeps its competitive lead over China. Meanwhile, OpenAI CEO Sam Altman signaled that the company may weigh slowing down cutting-edge development due to growing industry and employee concerns.
10. The death toll from a devastating Philippine ferry fire that broke out on a route from Manila to Palawan rose significantly as rescue teams accessed the burnt vessel.
11. India’s foreign exchange reserves saw a substantial record jump of $44.903 billion, while the rupee traded lower against the U.S. dollar.
12. India is actively in talks to acquire lithium blocks in Australia and Chile, alongside plans to secure five more blocks in Argentina.
13. Canara HSBC Life was also penalized ₹1 crore by the insurance regulator for mis-selling a policy to an 88-year-old.
14. Cochin Shipyard and Drydocks World joined forces to scale up and expand ship repair facilities. Meanwhile, the National Stock Exchange (NSE) is gearing up for its major IPO to raise ₹22,569 crore

International news:

1. Iran has temporarily suspended the 10% freight charge on foreign vessels carrying oil, gas and LPG products to reduce transport costs and support energy shipments
2. US Commerce has ruled that India’s solar subsidies violate trade rules.
3. Accuracy Shipping’s subsidiary A.R.S. Terminals receives a CBIC letter of intent to set up a container freight station at Kandla, involving ₹25 crore capex and targeting ₹175–200 crore in revenue.
4. Major global technology discussions highlight India’s push for AI infrastructure, with commerce officials holding talks with Microsoft regarding local cloud and GPU capabilities.
5. Donald Trump brushed aside warnings from researchers about potential human extinction risks from advanced AI, emphasizing that his main focus is ensuring the U.S. keeps its competitive lead over China. Meanwhile, OpenAI CEO Sam Altman signaled that the company may weigh slowing down cutting-edge development due to growing industry and employee concerns.
6. Apple formally unveiled its highly anticipated, over-$2,000 foldable iPhone alongside other flagship hardware and ecosystem updates following a decade of development.
7. Oracle reported strong momentum with cloud sales more than doubling, beating estimates on the back of heavy artificial intelligence demand. On the other hand, software maker Adobe missed forecasts, highlighting lingering investor concerns over AI’s short-term commercial impact.
8. The U.S. and nations worldwide marked the 25th anniversary of the September 11 attacks, reflecting on decades of enduring grief and the enduring impact on global foreign policy and domestic security.
9. Wall Street saw a pullback in major stock indexes (S&P 500 and Nasdaq) as spiking oil prices (surging past $100 a barrel) and evolving Federal Reserve rate-hike expectations weighed on investor sentiment. Meanwhile, the UK economy unexpectedly posted 0.4% growth in July, buoyed heavily by expansions in AI and cloud computing sectors.
10. Brazilian authorities launched a corruption probe involving Flavio Bolsonaro over investment questions tied to a failed lender, while political and regulatory circles react to shifting timelines and stances surrounding U.S. policies in the Middle East.
11. Global leaders gathered for the summit, with Russian President Vladimir Putin arriving in New Delhi for bilateral discussions with PM Narendra Modi. Security advisories were issued across the National Capital Region (NCR).
12. OpenAI CEO Sam Altman told employees that the company is open to slowing down the development of cutting-edge AI systems amid rising industry concerns regarding advanced risks.
13. The UN nuclear watchdog confirmed recent movement at Iran’s Pickaxe Mountain site, while the IAEA has yet to inspect its tunnels amid escalating international worries.
14. Wall Street saw pullbacks in the S&P 500, Nasdaq, and bonds as an oil price spike fueled further Federal Reserve rate-hike wagers.  

Nifty on weekly charts formed Hammer candle on Weekly charts with a decisive close above 23000 looks good in the coming week ahead. FII’s have hit 2.90 lacs on Thursday last week & now at 2.88 lacs shorts(Possibly big saturation levels are here) while Retail has also reached its possible saturation levels to hold longs at 2.41 lacs while Pro & DII’s has reduced their longs to 34k & 13k contracts almost in last week. We expect once Retails starts to wind up its longs & FII’s starts to cover the shorts the market may bottom-out & strong upward momentum may emerger which may take an immediate target towards 24300 kind of levels while crucial supports now lying within the bigger range of 22800-23200. This time major movement could get triggered by Banking & Financials Sector followed by IT & Consumer Durables goods sector.

However, Bank Nifty may show us an immediate crucial support of 55000-55700 kind of levels while immediate potential upside remains at 58000-58700 & any close above this could trigger a move towards 60000-61000 kind of levels in September series itself. The support may come from large-cap Private Sector banks.

“Nifty IT” sector has shown immense response by FII’s with consistent buying in last 45 days we expect an immediate target of 32000-33000 while crucial support still remains at 28000-29000 this time.

In Sensex crucial supports now remain within range of 73000-74000 range while immediate target could be towards 78000-80000 kind of levels.

Nifty Financials may find its crucial support levels now at 24000-25000 kind of levels upside immediate target still lies at 27200 kind of levels.

As of January 2026 the number of Demat Accounts has hit whopping 22.9 crores this not only helps the capital markets directly but also directly to Equity investments.

The monthly SIP in Indian markets have now increased to All Time High of Rs. 32,087 cr. per month as on March 2026. 

Brief Levels of Nifty / Sensex/ Bank Nifty / Nifty Financials / Nifty IT:

Nifty CMP:  23346.40
Nifty Potential Upside: 24300 / 25300+ (As the case may be)
Nifty Immediate Crucial Support: 22800-23200

Sensex CMP: 74294.96
Sensex Potential Upside: 78000-80000
Sensex Immediate Crucial Support: 74000-75000

Bank Nifty CMP:  56358.70
Bank Nifty Immediate Upside: 58700 / 60000-61000 (As the case may be)
Bank Nifty Immediate Crucial Support: 55000-55700

Nifty Financial CMP: 25318.35
Nifty Financial Immediate Target: 27200
Nifty Financial Immediate Crucial Support: 24000-25000

Nifty IT CMP: 28854.55
Nifty IT Immediate Target: 32000-33000
Nifty IT Immediate Crucial Support: 28000-29000

 About the Author:

Mr. Vishal Gupta a SEBI Registered Research Analyst is the founder of “VG STOCK RESEARCH”, founder of “THE ANALYSIS ROOM”, a writer & an advisor having rich experience in Indian Equity Markets who has spent years comprehending an industry wide shift and risk management with more than 14+ years exploring in depth analysis of the Equity & Derivatives.

He has also been into teaching Fundamental Analysis for quite some time giving investors/traders comprehensive knowledge & skills of Indian Equity Markets.

Email I’d: contact@vgstockresearch.com
Contact: +91-9953934544
Website: https://vgstockresearch.com/
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