In the past couple of weeks, foreign portfolio investors (FPIs) have nearly covered their entire bearish bets in the index futures segment in India’s equity markets. Data from Indiacharts showed that FPIs were holding net shorts of 1.46 lakh contracts in the index futures segment on the National Stock Exchange as on June 16, which has now fallen below 10,000 contracts. It is for this reason that the Nifty and Sensex have rallied nearly 10 per cent since their low levels in June.

FPIs were net buyers of index futures worth ₹7,568 crore in July so far and buyers of stock futures worth ₹1,897 crore. In June, FPIs were net sellers of index futures to the tune of ₹10,847 crore and net buyers of stock futures worth ₹6,313 crore. 

The FPI selling spree in the equity cash segment in July has declined substantially, according to data.

In July so far, the FPIs net sold cash equities worth ₹7,614 crore compared to ₹58,000 crore in June and ₹54,000 crore in May. In March and April, FPIs sold cash equities worth ₹43,000 crore and ₹40,000 crore, respectively, as per exchange data. 

Analysts are of the view that FPI selling has reduced substantially in the markets due to commodity prices witnessing a fall, which benefits India. Most of the FPI selling in Indian markets was absorbed by domestic retail investors and mutual funds.