FIIs net buy ₹4,711 cr index futures as short covering hits 4-month peak

Foreign institutional investors (FIIs) net purchased ₹4,711 crore worth of Nifty index futures on Tuesday, according to National Stock Exchange F&O data, signalling a significant shift in positioning by overseas money managers.

The buying spree saw FIIs acquire 28,587 contracts of Nifty futures, representing the most substantial net purchase in a four-month period. The transaction led to a marked reduction in overall open interest, which fell 13.3 per cent to 1.87 lakh contracts as investors unwound positions.

Market analysts attributed the sharp buying to aggressive short-covering by FIIs, who appear to have rushed to exit bearish bets amid recent market volatility. Short covering typically occurs when investors holding negative positions buy back contracts to lock in profits or limit losses, often resulting in sudden upward price movements.

The large-scale futures purchase underscores shifting sentiment among foreign institutional investors, who have been closely tracking macroeconomic developments and domestic market movements. The transaction volume highlights the significant influence FII activity continues to exert on Indian equity derivatives markets.