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The Indian stock market experienced a strong upward surge on September 12, 2024, with the Nifty and Sensex indices both closing nearly 2% higher after reaching record highs. This significant rally was attributed to short-covering activity, a phenomenon where investors buy back previously sold securities to limit potential losses, thereby pushing prices higher.
Nirav Harish Chheda, Technical and Derivatives analyst at Nirmal Bang, explained that a considerable amount of short positions had accumulated in the market. As these short-sellers covered their positions, it propelled the upward momentum in both the Nifty and the Bank Nifty indices. This short-covering activity is seen as a major contributor to the accelerated pace of the current market rally.
Among the notable performers, Hindalco and Bharti Airtel saw significant gains, both rising around 4%. This suggests a broader positive sentiment within the market, with investors taking advantage of the upward trend. The continued short-covering activity indicates a level of optimism about the future prospects of the Indian economy and stock market.