Foreign Investors Lapped Up Nifty Options Even As They Sold Rs 1.37 Lakh Crore In Cash Markets

The increase in positions by the FPIs coincided with the unwinding of the long positions in the Nifty Futures by Rs 22,464 crore. At the end of Nov. 6, foreign investors held open interest in the Nifty Futures to the tune of Rs 7,802 crore.

Foreign investors used Nifty Options to shore up their hedges as the benchmark index Nifty 50 corrected nearly 10% from its all time high and and the investors selling to the tune of over Rs 1.35 lakh crore in the cash market since Sept. 27.

Foreign investors held 1.26 lakh contracts of Nifty 50 in open interest on Nov. 6, compared to 4.59 lakh contracts on Sept. 27.

In the Nifty Options these investors increased their open interest in Nifty 50 contracts to 61.46 lakh, amounting to a nominal value of Rs 3.76 lakh crore, from 38.73 lakh contracts with nominal value of Rs 2.53 lakh crore.

So how have the FPI positions changed since Sept. 27? Here is a look:

• FPIs unwounded their long index futures by 3.8 lakh contracts and increased short index open interest by 1.32 lakh contracts.

• FPIs increased their open interest position in long stock futures and short stock futures.

• FPIs increased their positions in the Nifty options with increase in open interest positions, by increasing the open interest in options index call shorts by 4.87 lakh contracts. This means they sold Index call options compared to increase in 2.97 lakh contracts in option index call longs, that is, they bought index call options.

• FPIs closed out their short index put options as open interest declined by 1.84 lakh contracts, that is, they unwinded their put option positions. This was largely due to unwinding in the Nifty Bank and FinNifty positions by the foreign investors.

On a consolidated basis, foreign investors increased total short open interest positions by 8.31 lakh contracts, while the total long open interest positions rose by 5.29 lakh contracts. The long to short ratio stood at 1.44 on Nov. 6, with the foreign investors adding more short positions in the last 28 sessions.