The big bulls — foreign funds — who are driving up the benchmark Sensex have become aggressive in the futures trading segment. Foreign portfolio investors have increased their exposure in the derivative segment of the stock market with their positions shooting up to 24.57 per cent of the total market positions on October 30. This is as against 14.34 per cent as on August 29 and about 16 per cent at the end of September. Though this situation is not alarming as yet, market observers feel that the regulators and the government need to watch the FII movements and enforce tight monitoring. Tightening their grip MUMBAI: FIIs are tightening their grip on the Indian markets. They have invested over $ 5 billion in India in 2003 alone. This is the maximum investment that came to the Indian market in a year ever since the government opened up the capital market for foreign investors in 1993. FII investment is basically hot money which can be pulled out any time. A sudden withdrawal of funds can create a major turbulence in Indian market. On Thursday, the October derivative contracts came up for settlement and the exchange witnessed a record trading volume of Rs 12,846 crore in this segment, according to data available with the National Stock Exchange (NSE). The data on FII positions indicate at the increasing clout of foreign institutional investors (FIIs) in the derivative segment. The rise in FII exposure has come at a time when doubts are being expressed in several quarters about the identity of foreign investors who are pumping money into India. Speculation is rife that most of this money belongs to resident and non-resident Indians. The total derivative volume during October also crossed Rs two lakh crore-mark to touch an all-time high of Rs 2,30,362 crore on NSE. The month of October saw many more records break with all-time high volumes recorded in index futures, stock futures and stock options segments. FIIs have been actively pumping money into cash markets as well despite some selling pressure witnessed in the second half of the month. Their net inflows in equities during the current month have touched a high of Rs 6,202 crore till October 29. The cash market of the NSE has also seen its monthly turnover cross the Rs one-lakh-crore mark to hit a high of Rs 1,15,595 crore in October. With the rise in volumes in both cash and derivative market, total turnover on the National Stock Exchange surged 22 per cent in October, hitting a high of Rs 3,45,957 crore as against Rs 2,84,182 crore in September. However, the rise in cash market turnover was lower than derivative markets. As a result, the share of derivative in the total turnover on the NSE increased to 66.59 per cent as against 65.15 per cent in September and 50.53 per cent in April 2003. The daily average turnover in derivatives during the month also crossed the Rs 10,000 crore mark to touch an all-time high of Rs 10,016 crore. The surge was largely led by the futures segment. The average daily turnover in the stock futures has spurted 23 per cent to a high of Rs 6,364 crore in October as against Rs 5,176 crore in September. In the index futures segment, the turnover rose 17.7 per cent to a high of Rs 2,454 crore as against Rs 2,085 crore in September. No trading was recorded in the newly launched interest rate derivatives segment which recorded zero trading for the second month in a row.
