FII Activity Highlights a Strong Bullish Sentiment in Stock Futures
On May 12, foreign institutional investors (FIIs) ramped up their bullish positions in stock futures, with FIIs adding 78,532 long contracts and covering 29,899 shorts, boosting their net long position by 108,431 contracts. This shift led to an increase in their long-short ratio, rising from 1.88 to 1.94. The stock market saw significant positive momentum, including its largest-ever single-day gain in absolute terms, driven by easing border tensions with Pakistan and a 90-day tariff reduction agreement between the US and China.
Highlights:
FIIs increased long contracts by 78,532 and covered 29,899 shorts.
Net long position boosted by 108,431 contracts, pushing long-short ratio to 1.94.
Market saw its biggest-ever single-day gain on May 12.
DII Positioning Remains Cautious as Bearish Bias Persists
In contrast to the bullish activity from FIIs, domestic institutional investors (DIIs) remained cautious on May 12, adding only 301 long contracts and increasing short positions by 23,675 contracts. As a result, DIIs reduced their net position by 23,374 contracts, with the long-short ratio edging lower from 0.61 to 0.60. This data points to a continued short-heavy bias among domestic investors, highlighting a stark difference in sentiment compared to their foreign counterparts.
Highlights:
DIIs added just 301 long contracts and increased shorts by 23,675.
DII net position dropped by 23,374 contracts, with long-short ratio falling to 0.60.
Continued short-heavy bias among domestic investors.
FIIs Continue to Cut Short Positions, Reflecting Strong Bullish Outlook
Over the past 14 trading sessions, FIIs have systematically reduced their short positions on indices, moving from a net short position of -78,335 contracts on April 22 to a net long position by May 12. This consistent shift underscores the strong bullish bias of foreign investors, as they actively adjust their strategy to capitalize on market optimism.
Highlights:
FIIs reduced their net short positions from -78,335 contracts to net long.
Shift in positioning reflects a strong bullish sentiment in the market.
Sector-Specific Trends and Client Activity in Derivatives
Sector-wise, FIIs showed significant interest in IT derivatives, while banking and midcap indices saw notable long additions. Lagging sectors from the previous week, such as auto, IT, metals, and FMCG, also contributed to the positive momentum on May 12. In terms of client activity, the data was relatively stable, but tilted towards the long side, with 7,825 long contracts added compared to 5,860 shorts, leading to a net increase of 1,965 long contracts.
Highlights:
FIIs active in IT derivatives and added longs in banking and midcap indices.
Last week’s lagging sectors (auto, IT, metals, FMCG) contributed to momentum.
Client activity was skewed towards the long side, adding 7,825 long contracts.
