Foreign Portfolio Investors: FPIs slash bearish derivatives positions

Mumbai: Overseas investors slashed their bearish derivatives bets on India in the past week amid the strongest weekly run-up in domestic equities in the past four years. Foreign Portfolio Investors‘ Long-Short Ratio, a widely-tracked indicator of their bullish compared with bearish positions in index futures, rebounded to the highest level in 2025 on Friday, indicating these investors have reduced their bearish wagers in the past week.

The ratio rose to 0.47 on Friday from 0.21-0.23 in the week before last, according to data from Axis Securities. The reading had been low – mostly in the range of 0.12 to 0.22 – in the past five months as foreigners had been maintaining bearish futures bets at near-record levels in the period, while simultaneously pruning their shareholdings.

“The long-short ratio of FPIs had broadly been favouring short positions, with long positions below 20% for the last month,” said Rajesh Palviya, head of technical and derivatives research at Axis Securities. “This week, we saw foreign investors covering their positions, due to the oversold condition across the board, which has led to a pullback move.”

The Sensex and Nifty jumped 4.3% last week – the best weekly performance since July 2022 and February 2021, respectively. Overseas investors purchased stocks in three out of the previous five trading sessions.

“There has been short covering by FIIs in the recent days due to valuations turning attractive after this fall, expectations of better fourth quarter numbers, RBI infusing liquidity, and Trump and Fed pressures having subsided in the near future,” said Chandan Taparia, head of technical and derivatives research at Motilal Oswal Financial Services.

Since late September-when the market sell-off began-the Nifty has fallen about 11% while the Nifty Mid-Cap 150 declined 14% and Nifty Small-Cap 250 dropped around 17%.Near-term bullish indicators
Taparia said if foreign investors remain buyers again this week, the indices could extend gains. Technical indicators have also been pointing towards bullish moves in the coming days, said analysts.

Dhupesh Dhameja, derivatives analyst at Samco Securities said if the Nifty sustains above 22,300, it could result in a positive closing for the index this month. In such an event, the market will be in favour of the bulls next month too.

The Nifty has posted losses for five straight months, since October.

“We maintain our ‘buy on dips’ suggestion for next week, as all indices and frontline stocks have shown a breakout from their previous resistance levels, and we see upside across large, mid and smallcap indices,” said Dhameja.

Other analysts also said technical indicators are pointing towards a market recovery.

“The near term mood in the market has improved, and the Nifty has closed above its 20-day moving average (DMA) and 50- DMA, indicating potential upside in coming days,” said Palviya. “If Nifty closes and sustains above 23,430 levels in the coming days, we see the index going up to 24,000 levels.”