Market bottom elusive as FPIs' bearish bets near record high

Foreign portfolio investors (FPIs) have raised their bearish bets on Nifty and Bank Nifty derivatives to near record highs, signalling that a market rebound may yet be hard to come by or might peter out quickly.

- Ram Sahgal

They have also been selling in the cash market, which analysts said reflects caution amid muted earnings growth and India-US tariff tensions.

The FPI long-short ratio on index futures fell to 8.28% Friday, down from 8.58% last Wednesday and close to the 7.75% low seen on 22 March 2023.

FPIs also stepped up selling of index call options and buying of index puts on Friday, a sign they expect markets to stay flat or fall, which will enable them to pocket the premiums paid by call buyers.

Puts are purchased as protection against a correction, with their values rising as markets fall.

Net outstanding positions stood at a record negative 90,813 contracts for index calls and 283,135 for puts on Friday. Such positions help protect their $822-billion equity holdings as of July-end, National Securities Depository Ltd (NSDL) data showed.