Nifty futures discount hints at a likely short squeeze | Economic Times

Mumbai: The Nifty June futures traded at an unusually sharp 98.05-point discount to the Nifty spot at close of trading Friday, led by FII liquidation of index futures — Nifty and Bank Nifty — and fresh addition of net shorts by proprietary traders. While this might signal caution by certain market constituents, it could also result in shorts being squeezed and the market moving higher next week. The spot Nifty closed at 9,580.3 while the June futures ended at 9,482.25.Clients covered some of their shorts but still sat on cumulative net shorts of 13,448 contracts on index futures. FIIs liquidated their long index futures cumulatively by 10,295 contracts even as they purchased a provisional Rs 1,461 crore of equities on account of MSCI indices rejig. Proprietary traders added 6,283 shorts on a net basis.Intraday the discount between cash and June Nifty futures widened from 14.95 points at the day’s low to 98 points at day’s close.“The market by value of open interest is light and so, relatively minor selling could have resulted in the wide discount,” said Rohit Srivastava, founder, IndiaCharts. “Will have to wait till Monday to see whether we fall or get a short covering rally.”On Friday, the 50 share benchmark gained 90.20 points, or 0.95%, to 9,580.30. During the session, the index touched a high of 9,598.85 and a low of 9,376.90.