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Sustained FPI flows helped Nifty to navigate volatility


From the Derivatives front, FIIs have turned net longs in Index futures for the first time since October 2024 suggesting the ongoing positive bias despite border tensions. FIIs have been buying equities since mid of April and since then they have poured nearly 50k crores in the secondary markets. In the May month so far, FIIs have already invested more than 12k crores in just 5 trading sessions. We believe the ongoing flows are part of ETF flows seen across the globe and may continue till the mid of the month providing much needed cushion in these volatile times.
On the other hand, India VIX(Fear Indicator) has risen sharply in last few days and moved near 22% levels against the average of 14% levels which we saw since October 2024. Since India VIX is calculated through index option pricing, the rise in India VIX is a clear signal of protection buying for the portfolio through index options against any eventuality. We believe one should wait for the India VIX to subside for considering fresh longs. Only a move below 17 levels may spell some confidence in the equities in the short term.
Sectorally, we have seen significant resilience from the index heavyweights like private sector banking heavyweights and Reliance, who hold major weightage in EM indices.
Buying among these names helped Nifty to restrict its downside to just 1.3% so far against 3.3% seen in the small cap indices
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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