RCom 45% Hike Shocked Short Sellers

RCom 45% Hike Shocked Short Sellers

In the shares of Reliance Communications (RCom) on Wednesday, small investors were stunned by the sudden surge in prices. Many of these short sellers have been badly damaged. RCom’s share price has gone up by 45%. In the end, it closed at Rs 34.75 with a firm strength of Rs 17.27.

RCom, which was listed in the stock market in 2006, is the fastest boom in a day after that. It cannot be ascertained why the price of the shares of the company came so sharply, as the market participants have stopped tracking the company owing to its debt. Brokers say that there is a rumor that the company in debt can hardly sell assets to exit.

RCom’s share price was also on the stock of other companies with the positive impact. Reliance Naval & Engineering shares jumped to 9.4% to Rs 38.95. Reliance Infrastructure has gained 4.7% and closed at Rs 464.05. Reliance Power also jumped at 6% to Rs 39.25. At the same time, Reliance Capital closed at 6.6% to Rs 452.35.

By this year, the RCom stock price had declined by 63% till Tuesday, but till then there were a lot of bearish bets on it. Traders felt that the price of the company would fall further. They were selling RCom’s call options with big Confidence. When traders sell call options, they bet on the price that will be very low. The call option that has been written got stuck in a sudden surge in owing to RCom’s share price.

Regarding this, Derivatives analyst Hemant Nahata of IIFL Private Wealth said, “RCom had a lot of call-writing on Major Strike Rate. People were not expecting a sudden burst in its share price. So call writers got trapped.” He said that the call writers have no choice but to cut the deal with the losses. They said that due to this, a large number of purchases are being done at RCom both futures and cash market.

According to the data of NSE, the company is trading at 26.33 Crore shares, which is five times the average monthly volume. In the derivatives segment, RCom futures lost 7.7% in open interest. When there is an increase in the share price with declines in open interest, it means that the recession deals are getting reduced. The National Company Law Tribunal set aside the hearing of the insolvency petition against RCOM this week till next month. It took this step when a group of telecom company lenders had asked for some time to change the loan to the stock.

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Akash Gokhe

Akash is trained in multidisciplinary disciplines ranging from remote sensing, information science to mathematics. Besides being a student of science, he loves to express himself through words. He believes in the theory that no event which we see in our surrounding is a coincidence or happened randomly. Instead, they are just a consequence of combination of factors which surfaces in space-time domain. Therefore, we must be observant to understand the process responsible for triggering an event. So, he likes to stay observant and whatever he observes or learns from the surrounding, he loves to share to identify the missing links in his interpretation.

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