FIIs will now take the Indian stock market up out of ‘fear’, how? Learn


new Delhi. This was the second consecutive week when the Indian markets saw a strong rally due to easing of geopolitical tensions, fall in crude oil prices, inline outcome of US Fed meeting and short covering.

FIIs have been selling for 5 consecutive months
FIIs, who have been selling continuously for the last five months, made a comeback last week with some buying and it will be interesting to see how the market performs when they continue their buying. In the last 5 months, he has sold more than 2.3 lakh crores in the Indian equity market, which is his highest ever. Prior to this, their highest sales were done during the global financial crisis in 2008, which was about 1.3 lakh crores. The interesting thing here is that in 2008 Nifty and Sensex had corrected 60-65% due to sales of 1.3 lakh crores, but this time Nifty and Sensex only improved by 15%, while there was a lot of selling by FIIs.

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The domestic currency has shown strong resilience this time around and we are no longer completely dependent on FII flows. Our markets are in a much better position than most of the emerging markets and we have seen a strong uptrend from the lower levels, hence there could be a fear of missing out (FOMO) among FIIs and they can aggressively back into the Indian markets Which can increase the momentum in our market.

The market has already emphasized that the Russia-Ukraine issue may come to an end soon, although news related to the issue may cause some volatility in the market.

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If we look at the derivatives data, the long exposure of FIIs to the index futures has gone up to 57 per cent and the put-call ratio has increased to 1.33 levels. Both are indicating a bullish trend in the market. Looking at the OI distribution, the put writers are showing strong confidence at the 17000 level.

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