Not everyone is sold on this bull run

Mumbai: The stock market witnessed its best two-day run in over a decade with the benchmark indices gaining 8.1 per cent on Friday and Monday. But the bullish momentum has failed to convince some traders from cutting their bearish bets. They have retained their short positions in auto, real estate and public sector banks as they are uncertain whether the cut in corporate tax rate would benefit companies in these sectors.Analysts said the benefit of the tax cut is not going to be uniform across sectors. In the auto space, concerns over pickup in demand still continues. “The tax rate deduction will surely boost the corporate earnings but one need to be cognizant of the fact that not all companies get binary benefit. Stock from the auto sector are facing demand side constraints, so some rationalisation may happen and market may continue to hold shorts in stocks where they don't see an impact,” said Yogesh Radke, head of alternative and quantitative research at Edelweiss Securities. “The market is holding on to the shorts, mainly in auto, real estate and PSU banks,” said Rade.The government announced a tax bonanza on Friday by cutting corporate tax rates in a bid to revive economic growth from the sixyear low level of 5 per cent and attract investments to India. However, sectoral headwinds in these sectors are making traders hold on to their short bets.For example, in SBI, there is 38 per cent addition in open interest since July 5 and majority of the positions are bearish. “PSU banks, auto and real estate counters are still having shorts. NBFCs is also another space within financial services where people are still sitting on short positions,” said Amit Gupta, head of derivatives at retail brokerage ICICIdirect.Chandan Taparia, derivative analyst at Motilal Oswal, said 30-35 per cent of the bearish bets are in PSU Banks.“They will eventually see closure of short positions if the Nifty starts holding around these levels,” said Gupta.Traders are holding on to short positions in auto ancillaries too.

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