Nifty faced its toughest September derivatives series in twenty five years as the index fell 6.7%, losing more than 1,400 points. The decline was driven by heavy foreign investor selling and a sharp rise in bearish bets. Data shows foreign institutional investors increased index shorts by 41.9% to 2.95 lakh contracts while longs rose only 16.9% to 27,879 contracts. Net index shorts widened to 2.67 lakh contracts, the highest in six months.
Foreign investors added 87,102 short positions compared with just 4,022 longs, reflecting caution in volatile conditions. This shift coincided with net outflows of $3 billion, reversing two months of inflows. In stock futures, foreign investors remained net long but reduced exposure. Long positions fell 2.5% while shorts rose 0.7%, bringing net longs down to 4.96 lakh contracts from 6.01 lakh earlier.
The steep fall made September the worst derivatives series since 2001 when Nifty dropped 6.5%. Elevated crude prices, a weak rupee, rising bond yields and persistent foreign selling added pressure. Analysts warn that Nifty has slipped into a crucial support zone. Resistance is seen near 23,300 to 23,400 while support lies around 22,350 to 22,500. Brokerages advise caution as bearish bets have rolled into October, suggesting rebounds may face selling pressure.