Indian stocks surged on Thursday, bucking a global sell-off in artificial intelligence (AI) and technology shares as domestic buying and a rush by traders to reverse their bets against the market fuelled the rally. However, market experts do not see the uptrend sustaining as of now as foreign funds continue to pull money out of Indian equities.
The Nifty 50 index closed 1.66% higher at 22,997.35 on Thursday, clocking its biggest rise in percentage terms since 12 June. The Sensex 30 index closed 2.1% up at 74,315.61, similarly recording its highest rise since 12 June.
Heavyweights ICICI Bank, Reliance Industries Ltd, HDFC Bank and Bharti Airtel buoyed the index. Domestic institutional investors (DIIs) net bought shares worth ₹3,319 crore, while FIIs net sold shares worth ₹5,285 crore. However, the foreign institutional investors (FIIs), on a gross basis, still bought shares worth ₹12,735 crore on Thursday.
The proof of short-covering was visible in the put-call ratio of weekly options contracts on the Nifty, which witnessed a dramatic rise, said analysts.
The put-call ratio of Nifty options expiring on 19 October jumped to 1.65 on Thursday from 1.01 a day earlier, implying that call sellers were forced to cut their short call positions due to the smacking rally in heavyweights such as RIL, ICICI Bank, Bharti Airtel and HDFC Bank, they said.