Will August F&O series deliver? FIIs turn cautious after sharp July sell-off

F&O Series: The August derivatives (F&O) series has kicked off under pressure, as sharp declines in July and bearish positioning by foreign investors weigh on sentiment. The Nifty50 fell 784 points and the Bank Nifty slipped 1,258 points in the July series, snapping a four-month rally.

Despite hitting fresh highs during the month with the Nifty touching an 8-month high of 25,669 and Bank Nifty scaling a record 57,628, a steep 9.4 per cent correction in the IT index dragged broader markets lower.

Bearish FII Positioning Signals Caution

A key concern heading into August is the stance of foreign institutional investors (FIIs). Their long positions in index futures are down to just 9.6 per cent, a level last seen in March 2023, indicating a sharp bearish bias.

Rollover Trends Split Between Nifty and Bank Nifty

Data shows lower rollover in Nifty futures, suggesting trader caution, while Bank Nifty rollovers were higher, hinting at selective positioning in banking stocks.

Historical Trends: What to Expect in August

Positive in 4 of the last 5 years

But only 5 of the last 10 August series have ended in the green

Historically a volatile month with mixed outcomes

Market Outlook for August F&O Series

With conflicting signals from FII activity, rollover data, and sector-specific weakness, analysts at Zee Business expect the August F&O series to be volatile, with a mixed to slightly positive bias. Much will depend on global cues, macroeconomic data, and earnings from key sectors.