FPI bearish bets at record high on Nifty futures: US tariffs, weak rupee spook investors; last week’s outflows near Rs 2 lakh crore

Bearish bets by overseas investors on Nifty futures surged to record levels last week, signifying their sustained equity sell-off amid weak sentiment triggered by US tariff actions on India.Data from the National Stock Exchange (NSE) shows that as of Friday, the bullish bets of foreign fund managers on Nifty index futures stood just above the all-time low of 6.7 per cent. This was measured by NSE’s Long-Short ratio, a key sentiment indicator that compares traders betting on a rise in prices (long positions) to those betting on a fall (short). The ratio had hit a lifetime low of 5.98 per cent on September 30, the first day after the expiry of the September futures and options contracts.“Concerns around US President Donald Trump’s policy actions, along with the Indian currency touching new lows, have kept foreign investors cautious,” said Rajesh Palviya, head of technical and derivatives research at Axis Securities, as quoted by Economic Times. “The steady rise in gold and silver prices also indicates a preference for safe-haven assets.”Foreign Portfolio Investors (FPIs) have offloaded nearly Rs 2 lakh crore worth of equities this year, the highest-ever outflow, weighing on both stocks and the rupee.Despite this, the Nifty is up 5.3 per cent in rupee terms so far in 2025, but only 1.4 per cent in dollar terms—a key metric for overseas investors.The Long-Short ratio for Nifty futures has remained under 20 per cent since mid-July, staying below that threshold for 108 of the 181 trading sessions so far this year.“Indian equities trading at expensive valuations compared to other emerging markets and global equities in general has led to the churn of foreign money from India,” said Sham Chandak, head of institutional equities at Elios Financial Services, as quoted by ET. “Local currency being out of favour doesn’t help the case either.”Chandak added that short positions are likely to persist until Indian equities improve either in terms of valuations or growth prospects.Rollovers from the September to October derivatives series stood at 82.6 per cent, above the three-month average of 79.6 per cent, signalling that a large chunk of short positions was carried forward. “This indicates a large number of short positions being carried forward,” said Nilesh Jain, head of derivatives and technical research at Centrum Broking.