FPIs go Short on In­dia as Global Wor­ries Mount

The Economic Times - - Companies: Pursuit Of Profit - Sanam.Mir­chan­dani @times­group.com

Mum­bai: For­eign in­vestors’ bullish de­riv­a­tives bets on In­dia are at the low­est lev­els of 2017 amid the on­go­ing risk off sen­ti­ment in emerg­ing mar­ket sparked by the es­ca­lat­ing ten­sions be­tween the US and North Korea. As the war of words be­tween the two coun­tries is show­ing no signs of end­ing, an­a­lysts feel for­eign in­vestors are likely to con­tinue their sell­ing spree in In­dian mar­kets, which may drag the Nifty down by an­other 150-200 points.

The long-short ra­tio — the ex­tent of bullish bets com­pared to bear­ish bets — of for­eign in­vestors in­dex fu­tures po­si­tions has de­creased from 84.1% to 57.8%, the low­est level in the cal­en­dar year so far, said an­a­lysts. A low read­ing of this mea­sure sug­gests un­cer­tainty.

“FIIshave­tak­en­bear­ish­bet­sonin in­dex fu­tures worth ₹ 1,408 crore on Fri­day. With this, FIIs have cu­mu­la­tivelyshort­ed­morethan1lakhcon­tracts in in­dex fu­tures in the Au­gust series,” said Jay Ku­mar Puro­hit, tech­ni­cal and de­riv­a­tive an­a­lyst at Cen­trum Broking.

The geopo­lit­i­cal ten­sions pulled down ma­jor Asian mar­kets by 1-3.5% in the week ended Fri­day, with the Sen­sex and the Nifty in­dices fall­ing the most. In­dian mar­kets posted their worst weekly per­for­mance in 18 months last week, with ris­ing In­dia-China bor­der ten­sions also damp­en­ing sen­ti­ment. Weak set of earn­ings from blue chip com­pa­nies such as State Bank of In­dia and Tata Mo­tors also weighed on the mar­ket. Volatil­ity has made a come-

back in world mar­kets, with Dalal Street’s own fear gauge ris­ing to its highest level since Fe­bru­ary on Fri­day.

In the de­riv­a­tives seg­ment, for­eign in­vestors’ net short po­si­tions were at 1,38,083 con­tracts as against 31,239 at the be­gin­ning of the Au­gust series.

“For­eign in­vestors have heav­ily added short po­si­tions since the start of the series, hence the de­crease in long-short ra­tio,” said Sneha Seth, a de­riv­a­tive an­a­lyst at An­gel Broking.

De­riv­a­tive an­a­lysts said in­vestors should brace for an­other 150200 points fall in the Nifty in the near term.

“FPIs have been buy­ing puts and sell­ing calls, while their ac­tiv­ity in the fu­tures seg­ment has been more on the shorts side. We ex­pect the in­dex to fall to 9,550 lev­els,” said Chan­dan Ta­paria, de­riv­a­tive a n a l y s t a t Mot i l a l Osw a l Fi­nan­cial Ser­vices.

In the op­tions seg­ment, the highest con­cen­tra­tion among put op­tions has shifted lower to 9,500 strike from 9,800 strike ear­lier.

Seth of An­gel Broking said the in­dex could see a deeper fall to 9,200-9,300 lev­els if the im­por­tant sup­port of 9,500 is bro­ken.

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