FIIs have sold a net of almost $3 billion (Rs 12,458 crore) worth of shares in June in the cash segment, while creating short positions in the Nifty futures in the June contracts and rolling over to the July contracts. The FII sell-off has undone the impact of net buying of the domestic institutions and clients of broking firms who bought shares worth $2.7 billion in June.
There is bound to be no respite for Indian markets on Monday as Dow Jones closed in the red on Friday on concern over sub-prime related write-downs at banks and crude oil shooting over $142 a barrel last week.
The Nifty July futures contracts closed at a discount of 58 points to spot, which indicates bears' continuing short positions. FIIs, which hold over 60 per cent open interest in the Nifty futures contracts, had rolled over 90 per cent OI in the index futures on the expiry of the June futures on Thursday.
This means that the bears are unlikely to cover their positions. On Friday, the July futures closed at 4075 against the spot close of 4136. FIIs were net sellers in the cash segment worth Rs 666 crore and created fresh short positions of 17,316 contracts in the index futures.
In such a scenario, both the benchmarks are likely to close below their 52-week lows. The BSE Sensex closed below its 52-week low on Friday, while the intra-day 52-week low for the Nifty is at 4000. Technically, uptrend or pullback is intact as long as the market holds above new lows created last week.