FPI: FPIs’ index put buys touch 6-month high

Mumbai: Anticipating increased volatility, foreign portfolio investors (FPIs) have raised cumulative net purchases of put options on the Nifty and Bank Nifty to a six-month high. The net cumulative number stood at 2.09 lakh contracts on March 24. The last time the number crossed 2 lakh was on September 23, 2020, at 2.02 lakh contracts.

Investors purchase put options to hedge their portfolios against corrections in stock prices.

“Volatility is rising as key technical supports look likely to be tested in the next few sessions,” said Vishal Wagh, research head at Bonanza Portfolio. He expects the pre-budget low of 13,596.75 to be tested if 14,478 and 14,350 give way “conclusively”.

Rohit Srivastava, founder IndiaCharts, said if the Nifty broke last Friday’s low of 14,350.1, it could go towards 13,596.75. The index had soared from there to hit a high of 15,431.75 on February 16. Since then the Nifty has corrected 5.7 per cent to 14,549.4 on March 24.

On this day last year, Nifty tested a multi-year low of 7,511.1. From there it’s still up 93 per cent. In the calendar year through March 23, FPIs have purchased shares worth Rs 60,315 crore.