Street signs: CPSE short-sellers trapped, Nifty near 12,000, and more

Rally may take Nifty near 12,000 

The Nifty clocked gains of 7.3 per cent in the March series to close at 11,570. Rollovers were higher compared to the previous two months with better rollover costs. The longs have rolled over their positions to the next series and the momentum could take the index to 11,760 levels and higher as part of a pre-election rally. The Bank Nifty gained 13.5 per cent to 30,420 and there continues to be a buying interest in both private and public sector banks, said derivatives experts. The Bank Nifty needs to hold above the 29,888 zone to extend the rally towards 31,000, they said.

Ashley Coutinho

CPSE short-sellers trapped

Many traders were caught off-guard by the high investor demand in the CPSE ETF follow-on fund offer (FFO). According to industry players, traders had built arbitrage positions by shorting the 10 underlying stocks and by applying in the FFO, where units were offered at a discount of 4 per cent. Most of them had to cover their short positions after the CPSE ETF FFO garnered over five times subscription. “Traders feared that they may not get the desired allotment and their bets could go awry,” said a broker. Interestingly, most PSU stocks had rallied sharply on the back of short-covering on Monday even as the benchmark Sensex had declined as much as 500 points due to risk aversion created by the yield curve inversion in the US.

Samie Modak

Tepid grey market IPO premiums

Grey market operators don’t seem to be enthused by the initial public offers (IPOs) of Metropolis Healthcare and Rail Vikas Nigam. According to market players, shares of both the companies are quoting at low single-digit premiums in the grey market. State-owned Rail Vikas’ Rs 481 crore IPO closes on Wednesday, the same day when diagnostics company Metropolis Healthcare’s Rs 1,200 crore IPO opens. However, experts say the low premiums are not good indicators for the IPO prospects of the two companies. “Due to the lull in the primary market, many operators are not active. As a result, grey market premiums may not be the right way to judge these stocks,” said a broker.

Samie Modak