Nifty’s relief rally could extend to 22,900 in the short term. But it may not last long.
Subscribe to enjoy similar stories. The recent rebound in India’s stock market could stretch by 1.4% in the short term, said market experts, although they warned that it could be a mere bounce within a larger downtrend as foreign investors remain significantly bearish in the domestic cash and derivatives segment. On Thursday, stock market bulls kept India’s benchmark indexes up for a second straight day following 10 straight sessions of battering.
Foreign portfolio investors (FPIs) closed some of their short index futures positions the past two sessions, driving up the market. While the Nifty 50 gained 0.93% to end Thursday at 22,544.70 points, options data show the index could move in a range of 22,233-22,867 over the next few days, with a bias to the top end of the range. “It’s better to wait and watch, adopt a bottom-up stock-specific approach, and deploy funds gradually as making money this year won’t be that easy," said R.
Venkataraman, chairman of broking firm IIFL Securities. An analysis of NSE data showed that individual investor ownership of the NSE listed universe by market cap, directly and through mutual funds, in the December quarter surpassed that of FPIs for the first time in 18 years—18.2% to FPIs’ 17.4% share in the financial third quarter. In other words, FPIs still hold materially significant short positions on index futures—Nifty and Bank Nifty—and remain net sellers in the cash segment, which is what’s worrying analysts like Venkataraman.
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