Foreign institutional investors (FIIs) have offloaded stocks in January so far, with sales touching Rs 3,407.51 crore. This is the first time after February 2009 that FIIs have gone on a selling spree. The booking of profits by FIIs has taken a toll on benchmark indices with the BSE Sensex and NSE Nifty losing around 6.7% each so far. In October 2009, the two indices had posted negative monthly returns, when they fell by over 7%.
Compared to sales of Rs 3,407.51 crore in the cash market in January, FIIs have sold heavily in index futures to the tune of Rs 7,500 crore in the last six trading sessions. With heavy selling in the cash market and investors initiating further short positions or selling index futures, Nifty February futures contract slipped into a deep discount of 21.4 points from the premium of over 1 point that it commanded on Monday. Out of 179 stocks traded on the NSE F&O segment, 122 closed the day with a discount compared to their cash market price.
The open interest, which is the outstanding positions that have not been squared off at the end of the day in Nifty February futures, increased by over 109% to 23 million shares on Wednesday. Market watchers said investors carried over most of their short positions from the current month contracts, set to expire on Thurday, into the next month.
The discount in January Nifty futures too widened to over 18 points on Wednesday from 5.85 points the previous day with the open interest shooting up by over 17% to 25.4 million shares, signaling a build-up of fresh short positions, just one day ahead of its expiry.
Domestic institutional investors, led by insurance companies, who typically see inflows of around Rs 10,000 crore to Rs 15,000 crore in the last quarter, have been net buyers in January, purchasing equities worth Rs 9,231.46 crore. ?Insurance companies generally see inflows in the January ? March quarter and they tend to deploy money in the markets, ? said Sashi Krishnan, CIO, Bajaj Allianz Life Insurance.