One of the oldest adages on Wall Street is “If you want a friend on Wall Street, get a dog”
Nothing illustrates this more than the carnage of NHPC.
In the case of NHPC, talk in the market is that a big trader was holding sizeable positions through a combination of margin funding, loan against shares and stock futures. This trader had been told by one of his many brokers that he would have to shift a chunk of his positions elsewhere, as the broker was unable to finance it. The trader had been in the market for the last couple of days, scouting for financiers to fund the position. He is said to have sought the help of a former BSE President who is renowned for his bearish calls on the market.
And while this bear operator declined to fund the position, he is learnt to teamed up with another old hand in the market, also renowned for his bearish calls. The duo is said to have short sold NHPC futures heavily last week. Open interest in NHPC stock futures shot up from under two crore shares (the equivalent of) to over 20 crore shares in a week. On Friday, NHPC March futures were trading at a 5 paise discount to the spot price, indicating massive short selling.
Open interest in NHPC futures declined around 40 percent to 14.55 crore shares on Monday, indicating that bears may have used the steep decline in price to cover up a good part of their short positions.-from MoneyControl