Positive cues from the US markets may have helped the markets to surge on Thursday. But experts believe that the gain can also be attributed to covering of short positions which were massively built up in the last few weeks.
On the derivatives segment, massive short covering was witnessed in Nifty February futures as the open interest (OI) decreased by 4.59% to 3.7 crore shares and the contract traded at 5,187 points a rise of 278.10 points or 5.67% with respect to the previous close.
Anita Gandhi, head of institutional business, Arihant Capital Markets said, ?We saw some positive sentiment building up amongst the investors on Thursday. Positive cues from the US markets coupled with inflows from the Foreign Institutional Investors (FII?s) helped the markets to surge but I think some short positions which were built up in the last few trading sessions were also being covered. Domestic institutional players were active buyers on Thursday and I think in coming days Indian markets will largely follow global cues?.
Significantly, board based buying has helped the markets breadth remain strong on the second consecutive day. On the BSE, around 2057 stocks saw their prices advance as against 697 stocks which declined and 41 stocks remained unchanged.
Even the small- and mid-cap stocks surged in line with the heavy weights and the BSE Small-cap index gained 358.06 points or 3.96% to close at 9,407.76 points while the BSE Mid-cap index added 377.19 points or 5.33% to end the day at 7,452.72 points. Among the sectoral indices, BSE Power and BSE Realty which had witnessed a lot of pounding earlier, recovered to post 8% gains. This was followed by BSE Capital Goods (CG), BSE (PSU) and BSE Consumer Domestic (CD) which gained around 7% each. Interestingly, the Reliance Power, which got listed on February 11 saw a 5.31% on Thursday to close at Rs370.05. It still remains below its issue price of Rs450. While the gain has brought some optimism back, experts believe that markets would remain volatile, ahead of the announcement of Union Budget. They are expected to consolidate later.
