FIIs short bets intact even as Nifty rises nearly 700 pts from recent lows

FIIs long-short ratio in index futures has barely moved from 0.09 to 0.11, implying presence of heavy short bets in the August F&O series.

The NSE Nifty 50 index has rallied nearly 700 points or 2.8 per cent from its low of 24,337 hit earlier this month on August 08, 2025 amid hopes of a peace deal between Russia and Ukraine, and the Indian government's plans to rationalize the Goods and Services Tax (GST) into a 2-tier system, bringing a majority of goods into lower tax slabs.  So far in the August series, the Nifty has gained 0.9 per cent and there are only seven trading sessions remaining for the monthly expiry.  Despite the sharp pullback from the lows, and the upcoming monthly expiry on August 28, foreign institutional investors (FIIs) continue to hold aggressive short bets in index futures till date. 

Here's what NSE F&O data shows

  According to the National Stock Exchange (NSE) futures & options (F&O) data, FIIs thus far in the August series have net sold index futures - including Nifty, Bank Nifty, MidCap - to the tune of nearly ₹6,300 crore.  Amid this, the open interest (OI) in index futures has risen by 25 per cent or around 42,500 contracts thus far.  As per the data, FIIs long-short ratio - the number of long OI in index futures versus short (sell side) OI stands at 0.11. This ratio implies that FIIs hold nearly 10 short bets in index futures for every long (buy side) trade.  Despite the recent near 700-point rally in the Nifty 50 index, FIIs long short ratio has barely moved higher from 0.09 to 0.11. In the last two trading sessions, FIIs have added 2,469 contracts on the long side, while reducing the short bets by merely 8,879 contracts.  ALSO READ | Will GST reform, S&P Global upgrade bring FIIs back to Indian stock market?  A closer look at data shows that FIIs net short bets in index futures stand at 33,871 contracts since the start of the August series till date. 

Here's what experts have to say

  Nandish Shah, Senior Derivative Analyst at HDFC Securities recommends that FIIs must be holding short bets in index futures owing to uncertainties' surrounding the US tariffs.  In recent days FIIs selling in cash has abated a bit, which is a good sign, says Nandish Shah; highlighting the fact that FIIs holding in the cash market is far more significant compared to the derivatives segment. Data shows that FIIs have net sold stocks worth mere ₹80-odd crore in the last two trading sessions.  The analyst adds that part of the FIIs short bets could be as a hedge position against the cash exposure. 

Nifty weekly options expiry tomorrow (August 21)

  The Nifty weekly options Put-Call-Ratio (PCR) stands at 1.11 - implying presence of higher open positions in Nifty Puts against Calls.  The F&O data shows that highest OI in Nifty Puts stands at 24,900 and 25,000 Strikes. On the other hand, highest OI in Nifty Calls is seen at 25,000 Strike followed by 25,500.  Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities highlights that Put writers are steadily shifting to higher strikes, while Call writers are inching upward as well - thereby signalling a constructive undertone.  A sustained breakout above 25,050 could unleash strong bullish momentum, as significant Call writers risk being trapped, leading to potential short covering, says Dhupesh Dhameja in a note.  On the downside, any dip towards the 24,750 zone is likely to be absorbed as an accumulation opportunity. Only a decisive breach below 24,700 would warrant caution; until then, the bulls are expected to maintain control, Dhupesh said in a note.