A sudden surge in the domestic equity bourses caught some investors carrying short position in the derivative segment unawares and prompted them to square off their positions, which they were carrying since last few months. Market experts say that good amount of short covering had taken place, especially in Nifty stock futures and Index futures, which helped the market to scale a new high. As a result, Nifty September futures closed the day at 4,742.70 points when compared to the spot Nifty?s close of 4732.35 points, thus commanding a premium of 10.35 points over spot Nifty.
Yogesh Radke, derivative analyst, Edelweiss Securities, said, ?Short covering in the derivative segment had definitely helped the market to scale a new high. Also, an overall positive sentiment has been established in the market with a good amount of fresh buying coming in stocks, particularly those belonging to banking and oil sector. We can expect a further upside from here and market touching new highs.?
?All sentimental indicators were positive on Wednesday with both short covering and fresh buying seen in stock futures. This indicates the prevailing inherent strength in the market,? said Viral Doshi, derivative analyst, Networth Stock Broking.
With a sharp rise in the prices of stocks belonging to index heavyweights in the futures segment, investors are now trying to take advantage of the arbitrage opportunities.
A derivative analyst with a domestic brokerage house said, ?A sudden rise in share prices in the futures segment due to abrupt short covering has made arbitrage opportunity available for the investors. Investors were seen buying stocks in cash market and selling October stock futures.?
However short positions are still visible in IT sector stocks, which analysts feel may not participate in the current rally. The second quarter results would be a key factor for deciding the future course of IT sector stocks.
