F&O Stocks: Wipro, Tech Mahindra Among 5 with Short Buildup; Understanding Short Selling

Short selling happens when a trader bets that a stock’s price will drop. They sell the stock they don’t own, hoping to buy it back at a lower price to make a profit. For example, if a stock is trading at ₹100, a trader might sell it at that price and then buy it back later at ₹90, making a ₹10 profit.

How Do We Spot Fresh Short Positions?

When a stock’s price drops, and the open interest (the total number of outstanding contracts) increases, it indicates a buildup of fresh short positions. This signal is stronger if trading volume also rises as the stock price falls.


Stocks with New Short Positions on Monday

  1. Coforge: Dropped 3.81%, with open interest rising 18.39%.
  2. Persistent Systems: Fell 3.46%, with open interest increasing by 5.03%.
  3. Tech Mahindra: Declined by 2.8%, with a rise in open interest of 3.48%.
  4. Vedanta: Price fell by 2.66%, with open interest up by 4.58%.
  5. Wipro: Dropped by 1.97%, with open interest increasing by 5.42%.

Additional Checks for Traders

To make better trading decisions, traders should also consider the following:

  1. Bearish Crossover: Check if the stock price has fallen below its 20, 50, or 100-day moving average. This can confirm the downward trend.
  2. Long Positions in Put Options: Look for significant long positions in out-of-the-money put options, especially far-from-the-money ones. This might indicate that someone expects the stock price to fall further.

Traders can use the buildup of fresh short positions as a signal that a stock might continue to decline. By watching stock prices, open interest, and trading volumes, along with additional checks like moving averages and put options, traders can make more informed decisions.

Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.​​

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