Traders and experts are hopeful that overseas investors, known as Foreign Portfolio Investors (FPIs), will decrease their negative bets on the stock market today. This anticipation follows the release of exit polls on Saturday, indicating a strong performance by the Bharatiya Janata Party (BJP) in the general elections.
FPIs currently hold a significant amount of negative positions in index futures, particularly in the Nifty, valued at around $2.8 billion or ₹23,400 crore, according to data from Nuvama Research.
Impact on Market Direction
The direction of the market today will largely depend on how much FPIs decide to reduce these negative bets before the vote count on June 4. Most analysts believe that the exit polls released on Saturday could prompt overseas investors to cover a significant portion of these negative bets, potentially leading to a rise in benchmark indices like the Sensex and Nifty by around 2-3%.
Expert Predictions
Experts predict that if the current government continues with a strong majority, there could be significant buying activity in the market today, potentially driving the Nifty up by 700-800 points and pushing it to new highs in the next few days.
Despite uncertainties in the market due to the elections and shifts in investment preferences towards China, domestic flows have helped stabilize the market. However, there has been nervousness among traders, reflected in the significant increase in the Volatility Index (VIX) to a two-year high of 24.6.
While FPIs have increased their negative bets in index futures, they also hold positive bets in single stock futures. Additionally, high net worth individuals (HNIs) and retail traders have increased their positions in stock futures significantly.
Some analysts believe that the Nifty could reach as high as 23,100 today, and sustaining above this level could lead to further buying activity, particularly by FPIs. However, others are more cautious, expecting intraday volatility but not significant gains.
Despite the excitement surrounding the election results, the market may face challenges in maintaining its bullish momentum in the short term.
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