Foreign institutional investors (FIIs) extend selling in index futures for a fourth day on Friday, totalling sales of 20.63 billion rupees, indicating they are bracing for lower levels in cash shares in the near term, dealers say.
Derivatives analysts say the rise in outstanding positions in index futures, coupled with a fall in cash share indexes, indicates the formation of short positions.
FIIs sold 5.63 billion rupees of cash shares on Friday, when the Nifty slumped 4 percent, ending a three-day buying streak, exchange data showed.
Nifty futures represent about 85 percent of the total outstanding positions and the banking sub-index represents about 12 percent of index futures contracts, NSE data shows.
The Nifty falls 1.3 percent after marking its lowest intraday level in 11 months, extending Friday's 4 percent slump as a record low rupee weighs.