Foreign portfolio investors (FPIs) made headlines on Tuesday as they continued their streak of selling Indian equities, marking the second consecutive day of net selling. While these overseas investors were offloading positions in index futures and stock options, they opted to buy index options and stock futures, showcasing a mixed sentiment in the market.

FPIs’ Activity in the Cash Market

According to preliminary data from the National Stock Exchange, FPIs sold equities worth ₹5,901.63 crore on Tuesday. This selling trend reflects ongoing cautiousness among foreign investors. In contrast, domestic institutional investors maintained a more optimistic stance, becoming net buyers for the third day in a row, acquiring equities valued at ₹4,322.58 crore.

Futures and Options Insights

As we approach the April 24 expiry, the landscape for foreign institutional investors in the derivatives market has shifted, with an increase in outstanding positions, commonly referred to as open interest in Nifty futures. The long-to-short ratio for FPIs in index futures currently stands at 30:70.

• Selling Breakdown:
  • Index Futures: ₹2,926.61 crore
  • Stock Options: ₹3,164.91 crore
  • Index Options: ₹10,005.94 crore
  • Stock Futures: ₹1,128.64 crore

Market Dynamics and Open Interest

The total open interest for Nifty 50 futures saw an increase of ₹182.04 crore, rising from ₹29,689 crore the previous day to ₹29,871.04 crore at the close of trading. This uptick indicates increased trading activity, despite the selling pressure from FPIs.

• Current Nifty Futures Status:
  • Price: Down 1.39% to 23,321.40
  • Premium: 155.7 points
  • Open Interest Growth: 1.98%

As for the upcoming April 3 expiry, the open interest distribution shows significant activity at the 25,400 call strikes, while the 22,500 put strikes have the highest open interest, suggesting key levels for traders to watch.

Long-Short Ratio Trends

The overall long-short ratio for foreign investors has adjusted, decreasing from 1.44 to 1.39. This shift underscores a growing cautiousness among FPIs, reflecting the current market volatility and investor sentiment.

In summary, the mixed trading behavior of FPIs, alongside the robust buying from domestic investors, illustrates the complex dynamics of the Indian equity market. As the expiry date approaches, all eyes will be on how these trends evolve and what they signal for future market movements.