Market Outlook: Fed meeting, FII data key factors for next week
Market outlook for next week will depend on factors like Fed rate cut, Japan inflation data and Foreign Institutional Investors (FIIs) activities, said analysts.
Soon after the presentation of Union Budget 2024-25, the Foreign institutional investors (FIIs) resorted to offloading positions, who had turned aggressive buyers in calendar year 2024.
As per the data with the depositories, FIIs had bought shares worth Rs 25,108.69 crore (net) until July 22, 2024. However, in the next three trading sessions, they net sold shares to the tune of Rs 10,711.70 crore, shows data, thus bringing down their net monthly purchases to Rs 14,396.99 crore thus far in July.
However, the net inflows in a single month this July remains at the highest since the last 13 months. So far CY24, FIIs have net sold stocks worth Rs 1.10 trillion.
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The NSE data shows that FIIs index futures long-short ratio stood at around 5:1 till mid-way through the July series; implying 5 long positions in index futures for every bet on the short side.
This ratio at the start of August series has dropped to 1.3:1; clearly showing a lesser bullish bias.
The FIIs resorted to long unwinding in the last three sessions as the ratio declined from 3.4:1 on July 22, to 1.3:1 on the expiry day.
FIIs offloaded 136,000 contracts of index futures for a consideration of Rs 10,335.77 crore since Budget 2024.
Analyst believe that the sudden reversal in their mood in July is driven by changes in the treatment of capital gains for listed, unlisted and compulsory convertible debentures (CCDs).
Nuvama Alternative & Quantitative Research in its recent note said in the futures & options (F&O) segment, too, the FIIs have reduced long positions in index futures significantly. FIIs net longs stood at 62,000 contracts at the start of August series as against 319,000 long contracts at the start of July series.
FIIs, however, hold higher long positions in single stock futures. Their open interest in single stock futures stood at 672,000 contracts against 610,000 contracts, in the same comparable period, the note added.
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