nifty may series: FIIs turn long on Nifty in May series. What lies ahead?

Foreign institutional investors (FIIs) have finally turned long on Nifty after months of short positioning and increased their longs in Single Stock Future (SSF) also. Their net longs stood at 19,000 contracts versus 20,000 short contracts at the start of May series, according to a report by Nuvama.

Their net longs for SSF stood at 1,56,000 contracts versus 1,18,000 net long contracts at the start of May series.

“In terms of flows, there was strong participation by FIIs which helped largecap stocks scale up while the HNIs/retail category drove midcaps higher. FIIs pumped in $3.1 billion (Rs 25,637 crore) in May,” the report said.

The brokerage added that in contrast, domestic institutional investors (DIIs) who were supporting the markets in prior months, used the sharp rally to book profits as they sold equities worth $372 million (Rs 3,076 crore).

In the derivatives market, FIIs bought index futures worth Rs 716.4 crore in the May series (30 days) and sold index options worth Rs 32,252.3 crore, according to Trendlyne data.

Meanwhile, the client category (HNI & Retail) increased their short positions in the index and have reduced their longs marginally in SSF as well. Their net shorts stood at 18,800 contracts versus 4,900 short contracts at the start of May series, Nuvama report said. Their net longs in SSF stood at 1,055,000 contracts (down 33,000 contracts) versus 1,088,000 contracts at the start of May series, it added.

The bulls maintained an upper hand in the entire May series, and they continue to hold the grounds which was clearly reflected in roll cost and how participant-wise positioning changed. Equities stayed in rally mode, with the benchmark climbing up by approximately 2.3% and settling at 18,321 in May Series while midcaps were an outlier with gains of 5.6%.“Nifty Index moved higher and then consolidated and settled at 18,321 which was near to our expected levels of 18,250 odd. Nifty futures rollovers stood at 71% vs 70% (last three series),” the report said.

Top sectoral gainers in May series
— Auto Index (7.3%)
— IT Index (5.8%)
— Realty Index (5.4%) and
— FMCG Index (4.8%).

Top sectoral losers in May series
— PSU Bank Index – down 2.4% and
— Pharma Index – down 0.5%

June Series Outlook

“The Nifty can move higher but crossing 18,660 will be a challenge as seasonality remains in favour of bears,” the Nuvama report said. For the last ten years, Nifty bias is tilted towards bearishness as Nifty has settled in the red on 6 out of 10 times while 7 out of 10 times Nifty Bank has settled with declines.

Nifty futures will start the June series at a higher OI base of Rs 16,900 crore (92 lakh shares) versus OI of Rs 16,000 crore (90 lakh shares) seen at the start of May series. On Expiry Day, the roll cost for Nifty was around 50-52bps as compared to previous day’s 49-52bps.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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