Home / FII Short Positions at a 6-Month Low, Retail & HNI Longs Also at a Low – What It Means for the Market?

FII Short Positions at a 6-Month Low, Retail & HNI Longs Also at a Low – What It Means for the Market?

2025-03-25 Ravi Mehta

The stock market has witnessed a strong rally recently, but who are the real winners and losers in this move? A deep dive into the latest F&O data (as of March 24, 2025) reveals an interesting shift in market positioning.

Foreign Institutional Investors (FIIs) have significantly reduced their short positions in index futures, hitting a six-month low. At the same time, retail investors and High Net-worth Individuals (HNIs) have also cut their long positions to the lowest levels in six months. Despite the rising market, retail and HNI traders remain bearish, continuing to short or hedge with put options.

A crucial takeaway from the data is that today’s rally was not driven by FII short covering but rather by cash market buying, signaling strong institutional interest in equities. With FIIs still holding a 68% short position in index futures, the market’s next move will be closely watched.

Key Takeaways from the Latest F&O Data (as of March 24, 2025)

Foreign Institutional Investors (FIIs) have reduced their short positions in index futures to a six-month low.
Retail investors and High Net-worth Individuals (HNIs) have also cut their long positions to a six-month low.
The recent rally in the stock market has largely benefited FIIs, while retail and HNI traders have faced losses in the F&O market.
Despite market strength, retail and HNI traders are still short or buying put options.
FIIs added +1401 long contracts in index futures.
FII Long:Short ratio stands at 32%:68%—showing they still hold a significant net short position.

Understanding the Market Moves

1. Not a Short Covering Rally, But Cash Market Buying

A key observation from the derivatives data is that today's rally wasn't driven by FII short covering in index futures. Instead, it appears to be a result of buying in the cash market. This distinction is crucial because:

If the rally were driven by short covering, it would be a temporary, technical move.
Cash market buying indicates genuine demand and confidence in equities.

2. FIIs Still Net Short, But Reducing Bearish Bets

While FII short positions in index futures are at their lowest in six months, they still have a 68% short ratio. This means that while they are reducing bearish bets, they haven’t fully turned bullish on index futures yet.

3. Retail & HNI – The Pain Trade Continues

Retail and HNI traders, who were primarily shorting the market and buying puts, have continued to lose out as the market moves higher. Their long positions are also at a six-month low, indicating:

A lack of confidence in the rally.
Potential further short-covering pressure if the market continues to rise.

The latest F&O data suggests that FIIs are gradually reducing their bearish bets, but they haven't turned fully bullish in the derivatives market. Retail and HNI traders remain skeptical, continuing to short the market or hedge with put options. The market rally appears to be fueled by cash market buying rather than short covering.

Disclaimer:The content in this article is for informational purposes only and should not be considered as financial or investment advice. Derivatives trading involves substantial risk, and investors should conduct their own research or consult with a financial advisor before making any investment decisions. The views expressed are based on available data as of March 24, 2025.