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Street signs: Short squeeze to drive markets higher

Experts said markets could go even higher, as short covering trend likely to continue till July 27

Samie Modak & Chandan Kishore Kant 

Street signs: Short squeeze to drive markets higher

The last week got a shot in the arm due to ‘short squeezing’ after the Securities and Exchange Board of India, barred participatory notes (p-note) from taking unhedged positions in the derivatives market. In other words, p-notes unwound their existing naked short positions, which led to a rally in information technology, pharmaceuticals and banking stocks. Technical experts said the could go even higher from current levels, as the short covering trend is likely to continue till July 27, the day of expiry for this month’s derivatives contracts. 

Samie Modak

MF industry could see more churn

Last week, Manish Gunwani, deputy chief investment officer at ICICI Prudential Mutual Fund, quit, reportedly to join a rival fund house. Gunwani joins a spate of recent exits, including Anoop Bhaskar, Vetri Subramaniam and Taher Badshah. Players say the Rs 19-lakh crore mutual fund (MF) sector is expected to see more churn in coming months. Talk of more two-star fund managers quitting are already doing the rounds. With the sector doing so well, there is a lot of demand for top-tier talent, says an official. 

Chandan Kishore Kant

Rally in newcomers halted

Newly listed companies such as CDSL, and Eris Lifesciences, saw a huge spurt in prices last week, amid buoyancy in the market. On Friday, however, most of these stocks fell sharply accompanied by high volatility, on buzz that exchanges might put these in the trade-to-trade category to rein in volatility. “The kind of rally some of the new stocks have seen isn’t sustainable. It won’t be surprising if and stock exchanges take action to curb speculation,” says a broker.

Samie Modak