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FPIs Net Sellers In Futures, Buyers In Options

Author: Dasari Sreenivasa Rao/Wednesday, October 14, 2020/Categories: Exclusive

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FPIs Net Sellers In Futures, Buyers In Options

After offloading nearly Rs2,500 crore in September, FPIs turned net buyers this month and the buying support should be supportive for broader markets in the coming weeks. Foreign Portfolio Investors (FPIs), who extended buying support in the previous week, are net sellers in futures this week (October 12-16) as they sold to the tune of Rs1,470crore futures in the first three sessions, while buying Nifty options worth Rs2,520cr on October 13-14. Last two sessions of the previous week also, FPIs bought to the tune of Rs2,000cr in index options, according to data on NSE. The NSE Nifty was trading at 11,931.05 points in first hour of Thursday (expiry day), while Options Maximum Pain is seen at 11,800 strike. Long build-up of positions were seen in Tata Steel, PNB, Indus Ind Bank, Bandhan Bank, Pidilit Ind, etc, while stocks such as Bharti Airtel, Nestel, Hind Petro, Adani Ports, Gail witnessed long unwinding activity. The Put-Call Ratio of Open Interest (OI) in Nifty was 0.78. The 12,000 strike recorded highest Call OI of 91 lakh contracts and highest Put OI of 55 lakh contracts was seen at 11,800 strike. 

The NSE Nifty recorded a significant pullback on the back of continuous FII buying and positive global cues. FIIs bought near Rs3,500 crore during the week.  Technology, cement and pharma stocks witnessed buying support. Better-than-expected results from technology heavyweights helped IT stocks move towards new highs, while short covering was seen in most banking and financial stocks towards the end as the banking index moved closer to its highest Call base of 24,000 strike. The Bank Nifty was trading at 23,896.55 points in first half of the session on October 15.The NSE’s broad-based index rallied over 1,000 points in the last two weeks with the addition of 50 per cent OI in the October futures and options (F&O) series. The aggressive long position formed. Analysts expect the ongoing positive momentum may continue in the banking index with declines remaining a buying opportunity.

On the weekly option front, continued option writing was seen at ATM & ITM Put strikes indicating downsides are limited in the index. Currently, 11,500 Put base has shifted to 11,700, which should remain an immediate support. At the same time, volatility has moved below 19 levels after testing 23 in the penultimate week. The positive bias is likely to continue in the broader markets till volatility does not move above 22 level. FIIs turned buyers once again on Indian equities last week as the Nifty surpassed 11500 last week. Despite range bound global markets, the Nifty has witnessed continued upsides. They bought almost Rs3,400 crore in equities. Meanwhile, domestic institutions turned sellers once again and sold close to Rs2,616 crore in equities last week. Domestic institutions have been net buyers in the recent declines seen since mid September and provided support near 10800. For October, net FII investment in equities has remained positive. They have bought around Rs4,019 crore in equities while they sold Rs4,310 crore in the debt markets.

According to ICICI Directo.com, in the F&O space, activities were mixed on the FII front. While they bought worth Rs1,621 crore in index futures, they sold to the tune of Rs1,464 crore in the stock futures segment during the week. However, FIIs bought Rs2,856 crore in index options during the week. On the other side, mutual funds (MFs) recorded encouraging inflows during the last couple of months. According to Motilal Oswal Financial Services, the gross inflows in equities were at a 6-month high and the sales of equity schemes was up 17.5 per cent month-on-month to Rs 179 billion. The latest fund folio report from Motilal Oswal further added that about 60 per cent of top-25 mutual fund schemes outperformed the markets. September saw an increase in sales of equity schemes (up 17.5 per cent MoM to Rs 179 billion).

The writer is a business journalist with 27 years of experience

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