FIIs Rag­ing Again in F&O Bull­ring

The Economic Times - - Companies: Pursuit Of Profit -

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.

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