Global risk appetite remains under pressure as equity markets grapple with macro uncertainty, policy normalization fears, and geopolitical stress points. Weakness across US technology names, concerns around corporate leverage, and anticipation of key economic data have collectively dampened sentiment. Asian markets are likely to open cautiously as traders position ahead of major central bank decisions and inflation data.

Foreign Institutional Investors are currently holding short positions at nearly 92 percent, the highest reading in the series. Such extreme positioning reflects elevated bearish conviction and hedging against further downside. Historically, very high FII short exposure tends to coincide with periods of heightened volatility and sharp intraday swings.

At the same time, FIIs have turned net buyers in the cash market after fourteen consecutive sessions of selling. This combination of high derivatives shorts and selective cash buying suggests tactical positioning rather than a structural bullish shift. It indicates that while investors remain cautious, they are also preparing for potential mean reversion or event-driven rebounds.

Multiple technical indicators across indices and heavyweights are flashing oversold readings. Momentum oscillators, short-term breadth metrics, and intraday price compression suggest selling pressure may be losing intensity. Oversold conditions often precede relief rallies, particularly when combined with extreme derivative positioning.

However, oversold does not automatically imply a trend reversal. In risk-off environments, markets can remain oversold for extended periods. Any bounce should therefore be evaluated for participation, volume confirmation, and follow-through rather than assumed to be the start of a sustained uptrend.

India VIX closing below the 10 mark suggests subdued implied volatility expectations. While low VIX readings are often associated with stable markets, in the current context they may signal complacency. Sharp macro triggers in a low-volatility environment can lead to abrupt repricing and sudden spikes in volatility.

For traders, low volatility coupled with high FII shorts creates an environment where sudden short squeezes or fast directional moves are possible, particularly around global data releases or policy announcements.

US CPI data scheduled for release tonight is a major near-term catalyst. Inflation readings will influence expectations around the US Federal Reserve’s rate trajectory and liquidity conditions. Any upside surprise could reinforce risk-off sentiment, while a softer print may trigger short covering across global equities.

The Bank of Japan is widely expected to raise rates tomorrow morning. A policy shift from one of the last ultra-accommodative central banks could have significant implications for global bond yields, currency markets, and capital flows, particularly across emerging markets.

Risk-off sentiment has been reinforced by renewed stress between the US and Venezuela. This has pushed Brent crude back above the $60 per barrel mark. Rising crude prices add to India’s macro sensitivity through the inflation and current account channels, especially if sustained.

Higher crude prices also impact sectoral performance, benefiting upstream energy names while pressuring downstream, aviation, paints, and other oil-sensitive sectors. Traders should remain alert to commodity-led rotations.

The Reserve Bank of India has reportedly been active in the currency market to stabilize a volatile rupee. Currency stability remains crucial for maintaining foreign investor confidence, particularly during periods of global risk aversion. Persistent intervention underscores the sensitivity of the rupee to external shocks and capital flow dynamics.

Global technology stocks have faced selling pressure, led by concerns around Oracle’s debt and balance sheet implications. This has spilled over into the broader AI-related trade, which had previously driven strong rallies. Markets are reassessing valuations, leverage, and monetization timelines within the AI ecosystem.

For Indian IT and digital services stocks, near-term sentiment may remain cautious despite long-term structural opportunities. Stock-specific execution and deal visibility will be key differentiators amid broader sector volatility.

A sharp short squeeze in silver, pushing prices beyond $66 per ounce, reflects stress positioning across global markets. Strong moves in precious metals often coincide with heightened uncertainty, hedging demand, and shifts in real yield expectations.