FII Index Futures Selling Rises To ₹14,477 Crore in September Series; Nifty OI Hits High

Foreign institutional investors have stayed on the selling side of index futures through every trading session of the September F&O series. Their net selling has now reached ₹14,477.39 crore across 11 sessions, while their futures exposure has continued to build. 

At the same time, the Nifty 50 has fallen 3.7%, or 903 points, since the series began on August 25. 

FII Futures Exposure Climbs 52.8% 

NSE data shows that FIIs' total exposure in index futures rose 52.8%, adding around 1.22 lakh contracts to reach 3.54 lakh contracts as of September 9. 

Nifty futures make up 76.2% of this exposure. Open interest in Nifty futures stands at around 2.70 lakh contracts, its highest level since April 13. 

Short Positions Have Increased Faster 

Dharmesh Bhatt, Head-Derivatives Research at Systematix Institutional Research, said FIIs started the September series with net shorts of 1,84,227 contracts and have since added roughly 54,200 more. 

The pace picked up near the end of the period. Net shorts increased by about 11,500 contracts on September 7 and another 14,700 across September 8 and 9. 

Bhatt described the accelerating addition of shorts as a bearish signal under his framework. FIIs' short-long ratio in index futures is currently around 8:1. 

Nifty Support and Resistance Levels 

Bhatt sees 23,379 as an important support level, followed by 23,123. On the higher side, he identifies resistance around 23,767, 24,055 and 24,334. 

According to his assessment, a break below 23,123 while FIIs continue adding shorts would be a more concerning combination. A move that holds above 23,379, together with slower short additions, would indicate some easing in selling pressure. 

Earlier OI High Had A Different Outcome 

The current Nifty futures OI level also has a historical reference. When OI last reached around 2.70 lakh contracts on April 13, the Nifty gained 3.1% over the next five trading sessions. 

Bhatt also noted that a similarly stretched FII short position had previously been followed by the Nifty finding a floor before its subsequent rally into July. 

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Conclusion 

FII positioning has become increasingly short during the September series as Nifty futures open interest reaches its highest level since April. The next moves around the 23,379 and 23,123 support levels will be closely linked, in Bhatt's assessment, to whether fresh FII shorting continues at the current pace. 

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