Foreign Investors' Bearish Nifty Bets at Four-Month High

Overseas investors have raised their sell positions on Nifty and Bank Nifty index futures to a four-month high, reflecting caution as global tariff tensions persist and earnings disappoint back home, according to analysts.

- Ram Sahgal

Foreign portfolio investors' (FPI) net shorts on Nifty and Bank Nifty futures stood at 121,820 contracts on Tuesday, the highest since 128,390 contracts on 19 March, according to analytics firm IndiaCharts. These short positions are essentially hedges against falling markets, which reduces the value of their equity assets. The total FPI equity assets stood at ₹74.18 trillion as of 30 June against mutual funds' equity-oriented schemes' assets worth ₹32.69 trillion, according to NSDL and AMFI data.

"While markets have factored in FY26 Nifty earnings per share growth at 11%, EPS growth for FY27 has been cut to 15.5% currently from almost 22% at the beginning of the year, which is behind the cautious FPI stance, as relative to earnings growth expectations our valuations are rich," said Shrikant Chouhan, EVP (head of research), Kotak Securities.

Based on FY25 EPS of ₹1,013, the Nifty's current price-to-earnings multiple of 25 is higher than the five- and three-year average of 24.23 times and 22.46 times, respectively, according to Bloomberg data.