Why are FPIs making record bearish bets on Indian markets?

FPIs are making record bearish bets due to better risk-free returns in the US, a depreciating rupee, and concerns over India's market valuations.

What is the impact of the US Supreme Court decision on Indian exports?

The US Supreme Court's verdict on President Trump's tariffs will determine the validity of these tariffs, potentially impacting shipments to India's largest export market.

Will retail investor inflows prevent a crash in the Indian market?

Steady inflows from retail investors through SIPs are expected to provide support and prevent an outsized market correction.

Home / Business and Economy / Record Bearish Bets by FPIs Signal Indian Market Turbulence

Record Bearish Bets by FPIs Signal Indian Market Turbulence

12 Jan

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Summary

FPIs boosted bearish index futures bets to a record high.
Proprietary traders increased bearish index options positions.
US Supreme Court verdict on Trump tariffs adds market uncertainty.

Record Bearish Bets by FPIs Signal Indian Market Turbulence

Indian markets anticipate increased volatility as foreign portfolio investors (FPIs) established a record high in bearish index futures bets last Friday. This heightened caution by FPIs, along with increased bearish positioning by proprietary traders in index options, sets the stage for a turbulent trading week. The market is closely watching the US Supreme Court's impending decision on President Donald Trump's tariffs, a verdict expected this week that could significantly influence trade dynamics with the US, India's primary export destination.

The benchmark Nifty has experienced a substantial rally from its 52-week low on April 7 last year, reaching a record high last Monday, largely driven by domestic institutional investors. However, sustained selling by FPIs has capped recent gains. Analysts attribute the FPIs' risk-averse stance to better returns in the US market and a depreciating rupee, alongside concerns over India's valuation relative to earnings. The MSCI India index has lagged significantly behind the MSCI US index in returns over the past year.