FPIs trim short positions, lay ground for a pre-Diwali rise

Easing US bond yields and the falling dollar have prompted foreign portfolio investors (FPIs) to prune their near-record bearish bets on Nifty and Bank Nifty futures contracts over the past two sessions through 6 November, raising hopes that the Nifty may gain another 1.5% before Diwali, touching 19,700.

- Ram Sahgal

The FPI short-covering resulted in the Nifty successfully staying above a key retracement level of 19,367 for a second day on Tuesday; the market closed at 19,406.70, 78 points above the day’s low, which is seen as a positive sign in the markets.

FPIs pruned their cumulative index net shorts to 147,370 contracts on 6 November from 2 November’s 175,698 contracts, second only to the record bearish position of 196,378 contracts on 22 March when the market closed at 17,152. FPIs exert significant influence on market movements, based on their positions in the cash and futures markets.