Nifty F&O Setup: FII longs the lowest in three months; Here's what may happen next

Indian equities are entering a new trading week on the back of its worst one in nearly three months. The ₹15 lakh crore sell-off last week has meant that the Nifty 50 index has closed below its 20 as well as its 50-Day Moving Average and just below the lower end of the 500-600-point range it found itself stuck in for a better part of the last three months.

A major part of the sell-off has been the return of Foreign Institution Investors (FIIs) after the new year holiday and their aggressive selling.

During Friday's trading session, when the Nifty closed below the 25,700 mark, FIIs heavily increased their short exposure.

Foreign institutions sold index futures worth ₹3,195 crore on the final trading day of last week. Of which, they sold ₹1,942 crore worth of Nifty futures and another ₹1,006 crore in the Nifty Bank futures.

FIIs added 17,600 short contracts and unwound 1,120 long contracts in index future last Friday.

Where Does The FII Exposure Now Stand At?

With Friday's moves, the FII long exposure in index futures stands at just 7.5%, which is the lowest since October 14, 2025.

In absolute terms, the net exposure is at 1.86 lakh net short contracts. Accounting for the change in lot size, the figure goes up to nearly 2 lakh. At the start of the January F&O series, the Nifty lot size was revised to 65 from 75 earlier.

The 7.5% figure is a sharp reduction from the 13% at the start of the week.

Date	FII Net Longs
January 6	13%
January 7	10%
January 8	8.7%
January 9	7.5%

What Does History Suggest?

The Nifty had closed at 25,145 on October 14 last year, when the FII net longs had declined to 7.2%. In the next five sessions, the index had gained nearly 720 points.

In the 12 sessions after October 14, the index had seen a bounce of close to 900 points. During this move, the FIIs had covered their record short positions, bringing them down to 74% from 92.8% mid-series.

It must be noted that past performance is no indicator of future moves and this is just a historical trend mapping.

The January F&O series will end on Tuesday, January 27.