Mumbai: Foreign portfolio investors (FPIs) have unwound their long positions in the Indian equity market following the expiry of May derivative series suggesting that the markets could see further corrections in the near term. Derivatives traders pointed out that only 68 per cent of the outstanding open interest positions in Nifty futures contracts were carried forward to the next month as compared to last three month’s average of 75 per cent. According to them, overseas investors were seen aggressively cutting down their positions in Nifty futures contract.
“There has been a 32 per cent drop in the outstanding open interest positions in Nifty futures contract,” said Siddharth Bhamre, derivative analyst, Angel Broking. The total outstanding open interest positions in Nifty futures contract have dropped to 13.32 million units as compared to 19.64 million units during the beginning of this month. “The way FPIs have unwound their outstanding positions indicate that they are in no hurry to come back to the Indian markets in the near term. They are exiting as corporate earnings came lower than expected and the valuations of Indian markets are not looking attractive compared to their emerging market peers,” he added.
The equity markets registered their fourth consecutive day of loss on Thursday with the Sensex dropping 57.95 points or 0.21 per cent to close the day at 27,506.71 and the Nifty closing the day at 8,319 losing 15.60 points or 0.19 per cent. In the cash market, foreign portfolio investors turned heavy sellers offloading shares worth Rs 792.54 crore.
“The markets are now hoping for a rate cut by the Reserve Bank of India (RBI) in its forthcoming monetary policy meeting next week. If there is any kind of disappointment, the markets could see a correction with the Nifty likely to touch 8200-8100 level mark,” said Udaya Narayan Dubey, vice-president, institutional desk at R.K.Global.
