The indicator is fully extended in the picture, it's at it's rest position. Rotating the outside ring dial is just aligning the rest position with zero, it doesn't move the pointers. I did look at another indicator I have, the coarse dial doesn't read zero at rest either, maybe it's just how it is.
The more I think about it, one is a relative indicator, the other an absolute. I need to reprogram my brain, lol.