FPIs Trim Bank Nifty Shorts as RBI Rate Hike Looms
· Business · LiveMint, Economic Times
Foreign portfolio investors reduced their net short position in Bank Nifty futures from ₹1,980 crore on 25 September to ₹1,074 crore by 5 October ahead of the RBI policy decision. The RBI is widely expected to raise the repo rate by 25 basis points to 5.50% on Wednesday, marking the first increase in over three and a half years. Short covering by FPIs aligns with domestic investor anticipation of a post-policy rally in banking stocks, barring adverse surprises. Analysts warn that global headwinds or a fresh escalation in Middle East tensions could derail the expected gains. Nirav Karkera of W by Groww cited improving credit prospects and comfortable liquidity from the FCNR(B) raise as support for bank stocks. The cumulative net short position in index futures, including Nifty and Bank Nifty, fell to ₹54,444 crore on 5 October from ₹62,706 crore on 25 September.
Why it matters
Banking stocks and related sectors may see short-term gains if the RBI delivers an expected rate hike without negative surprises, benefiting investors with exposure to financials. Conversely, any policy deviation or global escalation could trigger renewed selling pressure, affecting market stability and investor sentiment.
Read the original report — LiveMint
Join us on Telegram
Breaking news the moment it lands. At 10,000 members we ship the Android app.