Heard on the Street - October 9, 2008

The sharp rebound in benchmark indices off lows on Thursday has many speculating that the market may have found its bottom, at least in the near term. Such conviction is not without a reason. Some of the biggest bears on Indian equities, including a derivatives trader — whose views are often taken as gospel truth by many — from a US-headquartered bank and Old Fox, are believed to have covered a significant chunk of their short positions around the 3,500-3,600-mark over the past couple of days.

The derivatives trader, who handles an India-dedicated proprietary book, has been bearish on Indian equities for a long time now. It is another matter that he too was wrong footed when the market bounced back sharply during the early part of this year. Old Fox is rumoured to have initiated long positions in some of the mid-cap stocks. He is also said to be building long positions in Ranbaxy.

Though traders do not rule out further downside in the indices, there is a feeling that the worst could more or less be over. But they add that the market is not ready for the next bout of bull rally, as it would take a while for foreign institutions to set their houses in order in the aftermath of the credit crisis.

Sorce: EconomicTimes