FPIs’ bullish positions at highest levels in over a year

Mumbai: The extent of bullish bets held by foreign investors in the futures segment touched the highest level in over a year last week.

The long-short ratio — a measure of bullish positions compared to bearish ones — on futures positions of foreign portfolio investors (FPIs) touched 65.6 per cent on Thursday before seeing a dip to 57 per cent on Friday, said derivative analysts. When the ratio is high, it means sentiment is bullish and vice versa. The ratio on FPI positions last week was the highest since March 22 last year when it touched 65.8 per cent.

Analysts said the ratio has risen due to short covering and indicates that the market trend is bullish. “The long-short ratio indicates FII interest is coming into the market. They have not been buyers in the cash market in a big way but in the index futures they have more long interest,” said Chandan Taparia, derivative analyst at Motilal Oswal.

Analysts said the liquidation of short positions have accelerated after the Nifty crossed 11,600. “They have unwound their short positions. This indicates stability in the market because the pressure of short positions will not impact it,” said Amit Gupta, head of derivatives at ICICIdirect .

Strength in technical indicators of blue chips such as RIL, Bajaj Finance and HDFC Bank, also the biggest contributors to the rebound, is giving traders confidence that the rally could stay for a while.