Indian equities look set for a strong start to the week, with Gift Nifty trading nearly 100 points higher as of 6:35 AM on Monday, September 8, indicating a gap-up opening for the Nifty 50.
The move comes against the backdrop of extreme bearish positioning by foreign institutional investors (FIIs) in the derivatives market. Data from the NSE for September 5 showed that FIIs net sold ₹1,305 crore in the cash market, even as domestic institutional investors (DIIs) absorbed the pressure with net buying of ₹1,821 crore.
The sharper trend was visible in index futures, where FIIs unwound 1,300 long positions and added 1,500 fresh shorts, dragging their long-to-short ratio to a striking 7:93. Such extreme positioning, dealers say, has often been a precursor to sharp short covering rallies. “Every time FII shorts have risen to record highs, Nifty has surged over 2,000 points across the following 3–4 series,” said a dealer tracking derivatives flows.
At the index level, the Sensex closed nearly flat at 80,710 (-7 points), while the Nifty 50 ended marginally higher at 24,741 (+6 points). The Bank Nifty gained 39 points to close at 54,114, while the Nifty Midcap 100 continued its outperformance with a 116-point rise.
Adding to the optimism, recent positive comments from US President Donald Trump and Prime Minister Narendra Modi have buoyed sentiment. Traders now expect supportive global cues to further boost risk appetite.
If history is any guide, the extreme short build-up could be the trigger for a powerful rebound in Indian equities, with September 8 potentially marking the beginning of a sharp upward phase led by short covering in index futures.
