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FIIs Flip Bets as US Court Overturns Trump Tariffs
23 Feb
Summary
- Foreign investors shifted from bearish to bullish positions before the US court ruling.
- Proprietary traders significantly increased bullish bets on index calls.
- Market experts doubt the sustainability of any potential rally due to ongoing US trade policy uncertainty.
Foreign institutional investors in India reversed their bearish market positions to bullish just hours before the US Supreme Court's decision on Friday. This shift, coupled with a substantial increase in bullish bets by proprietary traders, suggests an anticipation of a stock market rally.
However, market experts remain skeptical about the longevity of any such rally. Concerns linger that President Trump could utilize other trade laws to re-impose tariffs, a situation exacerbated by his recent invocation of a 1974 trade law to impose global tariffs.
This uncertainty is reflected in the options market, where Nifty options constitute a significant portion of outstanding positions. While FIIs and proprietary traders took bullish stances, retail investors and high-net-worth individuals offloaded contracts.
Market veterans like Shankar Sharma note that a sustained rally is unlikely, especially considering India's limited merchandise exports to the US and the unchanged H-1B visa rules, which would have had a more significant impact on software services exports. The benchmark Nifty has struggled to maintain gains above the 26,000 mark, with FIIs being consistent sellers.
