Stocks Brace For Volatile Month Amid Bearish FPIs

It is predicted that the Indian market will see volatile nature of the market this month with the FPIs (Foreign Portfolio Investors) turning bearish on both the derivates and cash segments of the NSE (National Stock Exchange) due to lofty mid and small-cap valuations to increase US interest rates beyond yields. In addition, it is also expected that the price of crude oil per barrel would touch the mark of $100. Therefore, the stocks are preparing for the volatile and wild swings this month. Meanwhile, Foreign Portfolio Investors are seemingly turning bearish. You should learn more about the expected volatile behavior of stocks this month, by reading this article till the end. Go through it till the end. Swipe down the page.


Stocks To Remain Wild This Month

Last month, the Foreign Portfolio Investors turned net sellers of Rs 14,768 in the National Stock Exchange’s cash market after acquiring 1.69 trillion worth of equities in the past six months. At the same time, the FPIs held a cumulative net short positing in the index and single stick futures along with their cash market sales. Reportedly, Foreign Portfolio Investors’ cumulative net shorts in index contacts is at 72 percent, and in the single stock future contract at 53 percent at the start of this month. In comparison, the FPIs started the September series of derivatives contracts with 51 percent cumulative positions in index futures and bearing bets in single stock futures at 52.8 percent.

For the unversed, the derivative contracts end every month on the last Thursday if Thursday falls on a holiday the derivative contracts expire a day before, and the new series starts the next day. The head of Nuvama Alternative and Quantitative Research Abholash Pagaria said, “In index, FPIs are taking short bets and have increased shorts in SSF (single-stock futures) marginally,” He further added that HNIs (high-net-worth individuals) and small retail investors were counterparties to the FIIs (foreign institutional investors) buying what they were selling in the index and single stock futures.

Retail investors and HNIs are described as clients by NSE, who hold cumulative net bullish positions of a whopping 90% long in single-stock futures and 60% in index futures. The managing director of Kotak Mahindra Asset Management Co. Ltd (Kotak AMC) Nilesh Shah said, “Clearly, the Foreign Portfolio Investors shorting in cash and derivatives will make the market choppy. The increase of oil by 25%-plus since July to date, lofty valuations in mid-cap and small-cap stocks, rising US bond yields, which are leading to outflows from EMs (emerging markets), are risks to the upside.”

Amzad Khan
Amzad Khan

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