FIIs short in the F&O, but remain net buyers in the cash market ?

FIIs have been net sellers in the derivatives segment since the beginning of this month, more so in the stock futures segment. Net sales in this segment (as of 13-Mar-06) amounted to Rs.2,114 crore. However, they remain net buyers in the cash segment. What does this indicate ?

To me this indicates the following -

1). FIIs remain bullish on Indian markets, hence the large net long positions in the cash market.

2). They, however, are unsure of the same in the short term, and are therefore hedging their positions in the derivatives market. If markets were to witness a sharp decline, positions in the derivatives market would ensure that the long positions in the cash market are maintained, without any sharp losses. This does seem like a narrow view and hedge funds or how my boss calls them "the water funds" essentially invest with a short term horizon indeed.

If the above is true then are we looking at a correction towards the end of expiry this month ?