Neal Bhai Reports — Foreign Investors Create Fresh Short Positions — Foreign investors built bearish bets on the market on Tuesday , when the benchmark equity indices witnessed their best single day rally in 18 months. Data from the National Stock Exchange (NSE) showed foreign investors created short positions in Nifty and Bank Nifty contracts.
The Sensex and Nifty soared roughly 1.8% on Tuesday led by short-covering by domestic traders. Analysts said FIIs (foreign institutional investors), however, unwound their bullish bets and built fresh short positions. FIIs added 7,978 contracts to their short position mainly in Nifty and Bank Nifty. The FII index future shorts, which stood at 43,994 contracts on Monday rose to 51,972 contracts on Tuesday . FII long positions in index futures which stood at 170,571 contracts on Monday was down to 1, 69,619 contracts on Tuesday . FIIs were net sellers of index futures worth `730 crore on Tuesday .
“Tuesday’s data implies that FIIs did not rush to cover their short positions despite a sharp rally, which was due to panic of domestic traders,“ said Rohit Srivastava, fund manager and technical analyst, Sharekhan.“Data of past few days indicates that FIIs have unwound their long positions from a record high level seen in August and September“.
FII net long position in index futures segment rose to the highest level of over 2,60,000 contracts in August and September.
FIIs were seen hedging their decision to increase short positions by buying into index options. On Tuesday, FIIs bought `3,057 crore worth of options positions, which also include options writing.
“Unwinding of FII long position from record level shows that market upside may be capped in the short term,“ said Navneet Daga, head-derivatives, IIFL. — Gold Silver Reports