Foreign Investors’ Derivatives Bets Reach Record $124 Billion in India
The Nifty has surged 18% from its low earlier this month, establishing itself as one of Asia’s top performers. It reached a new peak on Monday, driven by a risk-on sentiment in global markets following the Federal Reserve's significant rate cut last week.
FII and FDI
As Indian stocks continue to reach new highs, global funds have significantly increased their derivatives positions to unprecedented levels.
By Monday, foreign institutional investors held over 10 trillion rupees ($124 billion) in options and futures on equity indexes and individual stocks listed on the National Stock Exchange, according to Bloomberg data. Concurrently, they raised their bullish positions on index futures, including those linked to the NSE Nifty 50, to nearly 540,000 contracts—the highest since 2015.
After a setback in June when Prime Minister Narendra Modi's party lost its parliamentary majority, Indian equities have made a remarkable recovery. The Nifty has surged 18% from its low that month, establishing itself as one of Asia’s top performers. It reached a new peak on Monday, fuelled by a risk-on sentiment in global markets following the Federal Reserve’s significant rate cut last week.
Global funds have invested a net $8.5 billion into local shares from July 1 through the end of last week, positioning themselves for the largest quarterly inflow in over a year. This influx comes even as stocks are trading at elevated valuations compared to their emerging-market counterparts.
