FPIs' cash buying masks continued caution, say market experts

Foreign portfolio investors' recent net cash buying of about Rs 6,623 crore between 16 June and 3 July reflects the closing of reverse arbitrage positions rather than genuine bullishness, according to market experts. FPIs simultaneously net sold index futures worth Rs 5,118 crore and remain heavily short on index futures at 250,767 contracts, while year-to-date net cash outflows stand at a massive Rs 2.97 trillion through 3 July. Caution persists amid a 21% cumulative monsoon rainfall deficit and the risk of intensifying El Nino impacts in August-September, which could revive inflationary pressures.