MUMBAI: Stock markets rebounded smartly from their lows on the expiry of the May series of derivatives contracts and analysts anticipate a short-term bounce with foreign investors covering their short index futures — Nifty and Bank Nifty — positions.
The Nifty rebounded 266 points from the day’s low to close up 0.9% at 16,170.15. The Sensex also bounced 827 points off the day’s low to close up 0.94% at 54,252.53 points. “It’s probable that shorts closed out their positions and we could expect some further short covering, going forward,” said Siddarth Bhamre, research head of Religare Broking.
To be sure, FIIs sold a provisional Rs 1,598 crore worth share in the cash market. However, technical experts like Rohit Srivastava of IndiaCharts, expect they could have covered their short index futures positions. Covering short derivatives positions involves buying them back, which reflects in their cumulative index futures’ positions.
On Nifty, the range for the June series is 16,000-16,500. On Bank Nifty, the range is 35,000-35,500. On Wednesday FIIs’ cumulative shorts on Nifty and Bank Nifty futures were 32907 contracts. Analysts expect this to have reduced further on Thursday.