FPIs Net Short On Index Futures For The First Time In 10 Months

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It happened for the very first time in the last 10 months that the bearish play by the foreign Investors on the Nifty futures was found more than the bullish bets recently. This happened when there was a downside in the stock market and the market sentiment was quite low.

Since the month of August, it was observed that the FPIs were the net sellers in the cash segment for as many as 28 trading sessions out of the total of 38 sessions. And from that time onwards, these investors have been on the short positions only on the Nifty futures.

As per the recent data on the National Stock Exchange, it was seen that the FPIs were net short 1,180 contracts in the index futures where the net long in index futures was found to be 3,226 contracts. It was also observed that the FPIs long-short ratio in index futures was at 49.8 per cent. This long-short ratio was below 50 per cent for the first time in last ten months. The reason for a shortfall in the long short ratio in index futures was that there was a fresh shorting in index futures worth Rs. 250 Cr from FIIs in a recent trading session. This clearly states that the FIIs are more bent on the short positions in index futures than long positions.

With this, Nifty has gone below its 100-day average of 9,768.45 and the benchmark indices fell for the seventh consecutive session which was the longest ever losing streak in this year. The experts believe that further selling by the FII’s might make the index future fall to 9,500 points. FPIs have sold more than Rs 20,000 crore worth of shares since 1st August.

The earnings recovery scenario in the country is passive in the near future due to the disturbances like GST and the foreign investors moving to the other markets within the emerging market space which are trading at a cheaper price-to-earnings multiple.

The derivative experts say that the foreign investors have recently sold more than Rs 1,000 Cr in the cash segment every single day in the last few trading sessions, which is very disturbing, And, hence the movement of the rupee will be critical for the market direction. It is believed that the range of 6666.30 will be critical for the rupee. And if there is a rebound from that area, the Nifty should find support near 9,700. In July when it crossed the mark of 10,000 for the very first time which kept on soaring around psychologically for quite some days, the indices had seen a correction which got reversed after going to a low of 9685.55 on 11th August.

The derivative analysts hope for a correction of around 200 points in case the crucial level of 9,700 is not continuous.

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