Large-Cap Stocks Showing Short-Covering Action, Says Analyst
The benchmark equity indices gained for the second consecutive day on Thursday.
Large-cap stocks are showing short-covering action even as the markets have seen broad-based buying activity after the benchmark corrected towards the 50-day moving average, according to Rajesh Palviya of Axis Securities Ltd.
"Broad-based buying action is happening. Large, mid and small caps are showing great buying traction," the senior vice president of technical and derivatives research told NDTV Profit. On a near-term basis, the Nifty is in the oversold territory, he said.
The major call concentration area for the Nifty is 22,100. "After the breakout, the rally can then scale up towards 22,300. Most large-cap stocks are showing short-covering action," Palviya said.
Short covering, also called buying to cover, refers to the purchase of securities by an investor to close a short position in the stock market.
Bank Nifty at 47,000 is acting as the major supply zone. Some consolidation can be seen in the range of 46,500–47,000, according to Palviya.
The benchmark equity indices gained for the second consecutive day on Thursday, with financial services stocks contributing the most to the advances, following the U.S. Federal Reserve's decision to keep interest rates unchanged.
Palviya said Tata Steel Ltd. and Jindal Steel & Power Ltd. are the stocks in the metal space that would break out from their consolidation level.
AI Frenzy, High Liquidity, No Fed Surprise
Interest-rate expectations are where they were nine months ago, and the Fed is more worried about inflation than recession, according to Richard Harris, chief executive at Port Shelter Investment Management.
Harris said valuations of Indian equities were not concerning for foreign investors and the stock rallies in the U.S. and Europe are on the back of the frenzy of artificial intelligence-related companies.
High liquidity and buoyant consumer spending helping companies boost margins are also driving equities higher worldwide, the Asia-focused fund manager with nearly 40 years of experience said.
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