FIIs Raging Again in F&O Bullring
ET Intelligence Group: A quick look at the stock futures and options numbers on the eve of the Budget shows bullish bets build-up by foreign portfolio investors (FPIs).
The long-short ratio of FPI positions in the index futures, stock futures, and index call segment as on the close Tuesday’s trading hours is substantially higher than the average on the day before in the past five budgets. For instance, the long-short ratio was 3.5 on Tuesday against an average of 1.94 a day preceding the last five budgets. A figure of longshort ratio of 3.5 indicates that they have bought 3.5 share for every one share sold; higher the figure, the more bullish they are.
The combined open interest of index futures, stock futures and stock options at the end Tuesday’s trade was ₹ 2.23 lakh crore as against an average of ₹ 1.46 lakh crore in the past five budgets, according to IDFC Securities. I n 2 0 1 5 when Nif t y was at a similar level before the budget, the cumulative open interest was ₹ 1.55 lakh crore.
It must be noted that unlike index and stock futures, a lower long-short ratio in index puts reflects greater bullishness. In this segment the ratio as on Tuesday was 2.5 against an average of 3.6 on the day before the budget in the past five years.
The slip side of the data is the possibility of a deep correction that can be caused by an overtly populist and disappointing Budget.