While being net sellers of Rs 15,628 crore of cash market shares in the fiscal year to date, FIIs had so far hedged themselves by remaining net bullish on index futures, so as to gain from any appreciation. On April 12, they briefly shorted index futures, but the level was negligible at 200-odd contracts.
On Tuesday, however, they sold Rs 2,220 crore worth of index futures, which corresponded to a cumulative 20,858 futures contracts of Nifty and Bank Nifty. Of the total short positions created, they liquidated 2,571 long contracts and initiated fresh shorts on 18,287 contracts.
The last time an equivalent figure was seen was on October 30 when the Nifty gyrated 214 points between the day’s high and low. That time FIIs net shorted 25,396 contracts cumulatively. Fear gauge India Vix then rose almost 10 per cent intraday from the previous day’s close.
“The significant shorting implies that we could gap-down on May 12, before the market stabilises or bounces back,” said Rohit Srivastava, founder, IndiaCharts.
Siddarth Bhamre, director, InCred Equities, said the tone of FIIs had decidedly turned “bearish” with the fresh round of index futures shorting.
Bhamre added that FIIs had likely liquidated longs on Bank Nifty futures while initiating fresh shorts on Nifty futures. “That was because open positions on Bank Nifty futures showed a decline while those of Nifty futures had risen,” Bhamre said.
