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Sustained FPI flows helped Nifty to navigate volatility

ICICIdirect Research 09 May 2025 DISCLAIMER

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

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