The rally in the market on March 18 was fuelled by a wave of massive short covering undertaken by foreign institutional investors, turning them into net buyers of Indian equities after a month of relentless selling.
Data on the exchanges showed that 101 stocks out of the 220 in the futures and options segment saw short covering from FIIs. Among the prominent names, index heavyweight Reliance Industries emerged as the biggest beneficiary as FIIs added maximum positions in the counter, taking open positions in the scrip to the highest among all F&O stocks today.
Noting that we're currently in the second half of the March derivatives series, Bengaluru-based veteran derivatives trader Rajesh Srivastava, stated that if not completely, FIIs have still rolled over some positions to the next F&O series, triggering the short covering spree seen today.
Despite that though, Srivastava still cautioned to not read much into a single day's data and wait to see how the FII trend pans out from here. Aside from that, Srivastava believes that the market is sitting in the fag end of its correction zone, a sentiment echoed by several market experts recently.
Taking on the fact that the Indian market has remained in the green territory through March so far, despite the unabated selling by FIIs, Srivastava anticipates market positivity to continue irrespestive of the stance foreign investors choose to take on.
"The market has remained resilient thus far in March and this bullishness is likely to continue with at least another 500 point jump in the Nifty before some bit of profit booking kicks in around levels near 23,500-24,100," he added.
Foreign institutional investors were net buyers on March 18, acquiring shares worth Rs 1,462.96 crore. FIIs purchased shares worth Rs 15,450.39 crore while selling shares worth Rs 13,987.43 crore during the session.
Benchmark indices Nifty and Sensex soared to an over one-month high today, recording their biggest single-day rally in over a month as a buying frenzy swept through Dalal Street. Auto, banking, and metal stocks led the surge, extending the market’s winning streak to a second session.
The Sensex jumped 1,131 points, or 1.53 percent, to 75,301, while the Nifty surged 325 points, or 1.45 percent, to 22,834. During intraday trade, both indices briefly broke past the 21-day EMA, a key resistance level that had previously limited gains.
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