FIIs unwind positions; first rise since extended trading hours.

The turnover in equity derivatives on the National Stock Exchange (NSE) on Thursday recorded a jump of close to 80 per cent, the first surge this year after extension of trading hours. Around 4.39 million future and option (F&O) contracts were traded.

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The spurt was due to the huge unwinding of positions by some large foreign institutional investors (FIIs), market players said.

“The jump in volumes and turnover in the F&O segment was exceptional on Thursday. There was basket selling in the Nifty index by some funds, which is why volumes and turnover rose significantly. Also, selling was seen in some high-beta stocks after index heavyweights like Larsen and Tubro and BHEL fell sharply. Larsen fell mainly due to poor quarterly numbers,” said Deven Choksey, managing director of KR Choksey Shares and Securities.

“For the Nifty, 5,200 and 5,180 were seen as strong support levels. Huge selling, which resulted in higher volumes, was witnessed as stop-losses were triggered due to heavy selling in index heavyweights,” said Siddharth Bhamre, derivative head at Mumbai-based Angel Stock Broking.

According to broking firm IDBI Capital, foreign institutional investors had primarily built huge short positions in the equity futures segment. “The FIIs had built short positions of over Rs 14,000 crore in the market since December 24. Out of this, shorts of over Rs 900 crore were built in Nifty index futures,” said a research report.

However, according to IDBI, a massive short-covering by FIIs may give strong support to the markets during the expiry of January futures contracts.

Nifty index options generated a turnover of Rs 59,416 crore as 2.28 million contracts were traded. Nifty index futures generated a turnover of Rs 23,845 crore and a total of 963,000 contracts were traded. The rest of the turnover was generated by Nifty stock futures and stock options.

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