FPI Nifty Shorts: Foreign Investors Nifty Short Position At Highest Level In 2025 | Profit Insights

To put this in context, Nifty 50 Futures open interest at the end of July 18 stood at Rs 48,221.46 crore, of which FPIs hold Rs 28,865 crore.

FPIs’ short positions account for 85% of their total open interest held by them as of Friday’s close. The Nifty saw active call writing at the 25,000 and 25,100 levels, with puts showing strong support at 24,900 and calls indicating strong resistance at 25,100.

The increase in short positions comes amid a disappointing first-quarter earnings season and uncertainty over ongoing US-India tariff negotiations.

So far, first-quarter earnings have been tepid, with a disappointing outlook for technology stocks and private banks. Many private banks have reported compression in net interest margins and deterioration in asset quality, while deposit growth has remained marginal and credit offtake has been slow.

On the tariff front, India’s negotiation team has returned from the US, but discussions are ongoing. It remains uncertain whether an interim trade deal on goods will be announced by Aug. 1. India has so far maintained its red lines on market access and tariffs for the agriculture and dairy sectors. A graded tariff on some contentious items is likely, but this depends on President Trump’s approval, as he has consistently demanded full access to Indian markets.

After concluding a trade deal with Indonesia, Trump has indicated that a deal with India would follow similar lines. India also faces potential tariff pressures due to its BRICS membership and its oil imports from Russia.

Foreign investors’ open interest in stock futures has also risen to Rs 3.90 lakh crore — higher than on January 28, but slightly lower than the end of June when it peaked at Rs 4.08 lakh crore.

Meanwhile, FPIs have slowed their addition of short positions in Nifty Bank Futures. Their open interest stands at Rs 7,274 crore — much lower than during the fourth quarter and the April earnings season, when it peaked at over Rs 12,000 crore.

The slow down is also as a result of tighter delta position limits and regulatory scrutiny over FPIs' option trading activities that has led to manipulation allegation to Wall Street's largest high frequency trader, Jane Street. Jane Street has submitted its impounded amount and is awaiting Sebi to remove restrictions against trading.

Nifty Bank’s total open interest on July 18 stood at Rs 15,706 crore, meaning FPIs hold 46.3% of the total Nifty Bank open interest. Overall, Nifty open interest is gradually inching towards the June levels.

Since April, open interest has remained range-bound while the Nifty Bank index has risen 10.66% year-to-date. The index corrected in late March and April following fourth-quarter earnings but has declined 0.80% so far in July.

In the cash market, foreign investors have remained net sellers to the tune of Rs 16,955 crore so far this month. For the calendar year, their net selling in the secondary market stands at Rs 1.39 lakh crore. However, domestic institutions have offset this by purchasing Rs 21,893 crore in July alone.

The Nifty 50 has declined 4.64% so far this month.