Jump in FII long-short ratio sans correction may be a new Normal

Whether this signals a new dynamic or serves as a powerful cautionary message remains to be seen.

"Generally, when the ratio used to touch around 3, there used to be a correction, but the major reason for the ratio continuing to reach near 5 and stabilising with no sign of correction is the ," said Rajesh Palvia, head-technicals and derivatives, Axis Securities. "Also, if you look at , an indicator of market volatility, which did make a high of almost 32 on the election result day, has gradually come down and touched the monthly low zone of 12-13, indicating less apprehension with the current rally."

At the end of May, declined to as low as 0.15. Since then, there has been a sharp rally, with the rising 11% since the election results on June 4. Out of the 19 trading sessions post-election results, the Nifty fell just five times, and even then, only marginally.

"FIIs' long-short ratio was working as a key indicator in the past 2-3 years; and 5-6 times, the index bottomed out with the bottom formation of long-short ratio and topped out on the reverse," said Chandan Taparia, technical analyst, . "But in the recent past, the ratio headed to 5, and the index is still holding its gains with momentum." Taparia feels India's emerging also has a role to play in sending equity gauges higher across the market-cap spectrum.