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Stock markets showed signs of stabilising just a day after Prime Minister Narendra Modi announced a 21-day lock down across the country to stop the spread of Coronavirus.
A historic short-squeeze in Reliance Industries (RIL), the company which has the highest weight in Sensex and Nifty, gave stock markets a breather on Wednesday. The fact that foreign portfolio investors (FPIs) had wound up their entire net short positions in index futures segment also was soothing for the markets, experts said.
RIL’s share price gained 21 per cent intra-day after media reports suggested that Facebook will pick up 10 per cent stake in the company’s telecom arm Jio. The share price of RIL closed 14 per cent or 138 higher at ₹1,081.
Sensex gained 7 per cent or 1,861 points to close at 28,535. The Nifty index rose 6.62 per cent or 516 points at 8,317.
Market tracking firm IndiaCharts, which mines derivative data, said FPIs had turned net long in index futures segment to the tune of over 13,000 contracts at the close of market closing on Tuesday. According to the firm, in March the net short positions had reached a colossal 1,73,000 contracts in Nifty and Bank Nifty index and FPIs kept cutting it down as markets kept falling.
FPIs, however, continued their selling in the cash segment. Data from BSE showed that FPIs sold stocks worth ₹1,893 crore while domestic institutions were net buyers of stocks worth ₹737 crore.
The Bank Nifty index, which had been the worst performing in the market fall, gained 8 per cent or 1,373 points to close at 18,481. The government on Tuesday also announced relief for companies and individuals from tax and compliance filings till June 30.
“Although, FIIs are selling in the cash segment, they took buying positions in derivatives on Tuesday and that helped the markets to close higher on Wednesday. The market may stay between 8,000 and 8,600 levels,” said Shrikant Chouhan, Executive VP, Equity Technical Research, Kotak Securities.
Markets are eyeing developments in the US with regard to fiscal stimulus and measures of containing Coronavirus. India has recorded more than 500 confirmed cases of Covid-19 but has more than 40,000 cases. Till US markets remain stable, there may be not big fall in Indian markets too, experts said.
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