FIIs have been consistent buyers in the cash segment since April 15, with net purchases totalling a substantial ₹47,000 crore 
| Photo Credit:
Jirapong Manustrong

Foreign Portfolio Investors (FPIs) have significantly altered their stance in index futures, moving from a record net short position of 350,000 contracts in January to becoming net long on Wednesday after a sustained seven-month period of bearish bets. This shift to a net long position signals a change in FPI sentiment towards Indian equities, said experts.

“FII long short ratio in index has seen a recovery from its recent bottom of 8-10 per cent to now 50 per cent. They reduced 40 per short exposure and did short covering in the last 4-5 weeks,” said Chandan Taparia, head derivatives & technical research, wealth management at Motilal Oswal Financial Services.

India VIX has seen a spike from 14-15 to 21 zones, and volatility is gradually moving higher due to concern over geopolitical issues. But even after higher VIX, the index is holding on to key support and FIIs are continuously buying and covering their shorts, said Taparia.

Adding to this bullish undertone, FIIs have been consistent buyers in the cash segment since April 15, with net purchases totalling a substantial ₹47,000 crore over the past fourteen trading sessions.

Geopolitical headwinds

However, this emerging bullishness faces a potential headwind from escalating geopolitical tensions.

“The market appears not to have yet fully factored in any retaliatory actions from Pakistan following the recent Indian air strikes. A prolonged period of heightened tensions between the two nations could significantly dampen market sentiment and potentially reverse the current positive trajectory,” said Nandish Shah, Senior Derivative Analyst at HDFC Securities Prime Research.

With FIIs now net long in index futures, the cushion of their short positions is no longer available to support the market at lower levels, added Shah.

Technically, the Nifty’s uptrend remains intact as long as it holds above the 23,850 level. On the upside, the 24,500-24,590 band is likely to act as immediate resistance, presenting a key level to watch in the near term amidst the evolving geopolitical landscape, said Nandish.

Over the past one year, domestic institutional ownership has risen 160 bps year on year to an all-time high of 19.2 per cent at the end of the March quarter. FII ownership has dipped 40 bps y-o-y to an all-time low of 18.8 per cent.

Published on May 8, 2025