The Hindu Business Line : FIIs net sellers in derivatives in last 5 sessions

AT a time when the foreign institutional investors (FIIs) are bullish on Indian equity market, they have turned net sellers in the derivatives segment with sales crossing over Rs 1,200 crore in the last five trading sessions compared to net purchases of over Rs 200 crore in the cash market.

This is contrary to the FIIs' investment pattern in the first three weeks of this month when they were net buyers in the derivatives market.

A comparison of the FIIs' trading pattern shows that they sold heavily in index futures and stock futures between September 23 and September 29. The sale also includes stock and index options.

During this period, the FIIs sold derivatives contracts valued at Rs 1,204.06 crore as against net purchase of Rs 213.1 crore in the cash segment.

Brokers said there could be varied reasons for the FIIs being net sellers in derivatives market. According to a top official of a foreign broking firm, "stock market has gone up sharply this month and the FIIs expect the market to fall in the short-term.

They are mainly hedging their portfolio in order to maximise returns on their portfolio".

A dealer with another foreign broking firm said most of the selling in the derivatives market is mainly from hedge funds, who have become active again in the last couple of months.

"Hedge funds are short term players and with sharp rise in the stock price in the last one month, they have sold derivatives contracts in order to hedge their positions in cash market".

Stock prices have gone up sharply in the last one month with the BSE Sensex up 391.53 points, the highest rise this year month-on-month basis.

The rise in mid-cap and small-cap stocks is even much more.

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