Foreign Funds Use 3-Day Nifty Fall To Buy More Index Futures
Nifty Declines For 3rd Straight Day But FIIs Remain Index Futures Buyers
Major Indian equity indices retreated for the third straight day on Wednesday, prompting foreign institutional investors (FII) to use it as an opportunity to buy index futures.
Not only did FIIs increase their long positions in index futures, but they also bought back contracts they had sold earlier.
To hedge their bets, FIIs bought index puts on Wednesday and sold index call contracts bought earlier. An increase in options activity led to expansion in option premiums and the India Volatility Index (VIX) consequently advanced 2.7 percent which shows increase in anticipation of volatility in benchmark indices.
As the Nifty 50 index moved back below 9,050, there was unwinding in the 9,100 put whereas the 9,100 call saw further selling. Maximum open interest is now with the 8,900 put and the 9,200 call indicating a near-term range for the Nifty.
FIIs bought index futures worth Rs 1,053 crore. They also bought 28,800 index put contracts and unwound 10,102 index call contracts on a net basis.
