F&O Talk | What the current long-short ratio tells about FII positioning? Sudeep Shah on Ola, Newgen, 4 more top weekly movers

Domestic benchmark indices recovered after a gap-down opening and ended on a firm footing. IT stocks emerged as key drags in a volatile trading session, though broad-based buying across sectors kept the markets resilient. The Nifty climbed 116.90 points, or 0.46%, to settle at 25,571.25, while the BSE Sensex advanced 316.57 points, or 0.38%, to end at 82,814.71.

In light of the US Supreme Court’s Friday decision to rule Trump’s tariffs as illegal, sentiments are likely to remain positive, but higher volatility cannot be ruled out.

Analyst Sudeep Shah, Vice President and Head of Technical & Derivatives Research at SBI Securities, interacted with ETMarkets regarding the outlook for the Nifty and Bank Nifty, as well as an index strategy for the upcoming week. The following are the edited excerpts from his chat:

Q: Nifty managed to end the week with gains of 0.4% but failing to cross the 25,600 mark. What do Nifty charts suggest for next week of action?

Last week, the benchmark index Nifty traded within a narrow range of 512 points, which was the tightest weekly range seen over the past four weeks, resulting in the formation of an NR4 pattern. Interestingly, despite the compressed range, volatility remained elevated. During the first three trading sessions, the index witnessed a gradual pullback, however, Thursday saw a sharp reversal, erasing all the gains made earlier in the week. On Friday, the index once again found support near the lower end of the weekly range and staged a rebound. This erratic price behaviour hints that something more structural may be unfolding beneath the surface.

In fact, since February 4, the index has been consolidating within a defined range of 26,009 to 25,373. Even within this tight band, volatility continues to remain high. Owing to the sustained consolidation over recent sessions, all the key moving averages have flattened out. Momentum indicators and oscillators also point towards a sideways phase, with the daily RSI moving in a narrow range for the past 13 trading sessions. Such prolonged compression often acts as a precursor to a decisive directional move.
Going ahead, we expect the index to remain in a sideways trajectory in the near term, with stock-specific action likely to stay vibrant. However, following the Supreme Court’s ruling against the Trump-era tariffs, the market may open with a notable gap-up of nearly 350 to 400 points, buoyed by positive global sentiment.
In terms of crucial levels, the 25,400 to 25,350 zone will continue to act as an important support area, as multiple prior swing lows converge in this region. A sustained breakdown below 25,350 could pave the way for a sharper decline towards the 25,000 mark. On the upside, the 25,950 to 26,000 band is expected to serve as a key resistance zone for the index. The index’s behaviour around these pivotal levels will play a decisive role in shaping the next meaningful directional move.

Q: AI summit grabbed headlines this week and one of the takeaways was Nvidia and Anthropic announcing partnerships with India companies. Beyond the headlines and sentimental rally, how do you see this development and any stock/s that will now be under your radar?

The AI Summit announcements signal a structural shift rather than just a sentiment-driven move. NVIDIA has partnered with Indian players including Larsen & Toubro and Yotta to build sovereign AI infrastructure and GPU capacity in India. Meanwhile, Anthropic has tied up with Infosys to develop enterprise AI solutions using Claude models.

Over the medium term, this could unlock new revenue streams for IT services and digital infrastructure companies. Stocks such as Infosys, Tata Consultancy Services, and L&T remain on the radar.

That said, the IT index continues to face pressure amid AI-led disruption concerns and has not yet shown clear signs of stabilisation. The real impact will play out gradually, and investors should track sustained deal momentum and strong buying interest before expecting a durable trend reversal.

Q: What is your overall view on midcap and largecap IT stocks?

Overall, the IT space remains under significant pressure across both largecap and midcap names. The Nifty IT Index has cracked nearly 17% in the last three weeks and has decisively broken below its key long-term support, the 200-week EMA on the weekly chart. Momentum indicators are also weak: RSI has slipped below 40, MACD is below the zero line, and a rising ADX suggests the bearish trend is gaining strength.

Heavyweights and midcap players such as Tata Consultancy Services, Infosys, Wipro, Mphasis, LTIM, and LTTS have all slipped below their 200-week moving averages. FIIs have also sold Rs 10,956 crore in the IT space in the first fortnight of February 2026.

The structure is clearly weak for now. Avoid bottom fishing or trying to catch a falling knife. Despite recent AI-related announcements, the benefits are long term in nature. It is prudent to wait for the IT index to stabilise and for clear signs of strong buying interest before planning fresh exposure.

Q: What is your view on Bank Nifty?

The banking benchmark index, Bank Nifty, continues to deliver a standout performance, significantly outperforming the frontline indices. While the broader Nifty trades nearly 3% below its all-time high, Bank Nifty is positioned right near record levels, underlining the sector’s impressive strength. This relative outperformance is further validated by the Bank Nifty Nifty ratio chart, which has surged to a 33-month high, which is a strong indication that leadership within the market currently rests with the banking pack.

With the index hovering around lifetime highs, all moving average-based technical setups are aligned in favour of the bulls. The daily RSI is steady around the 60 mark, reflecting steady momentum, while the weekly RSI has already pushed deeper into bullish territory, reinforcing the strength of the ongoing trend.

Given this robust chart structure and momentum alignment, Bank Nifty appears well placed to extend its upward trajectory in the coming sessions. In terms of key levels, the 20-day EMA zone at 60,500 to 60,400 acts as a vital support area. On the upside, the immediate resistance is placed at 61,600 to 61,700. A sustained breakout above 61,700 could trigger a strong upward rally, potentially opening the doors to fresh all-time highs and the next leg of bullish momentum.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)