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To understand it we have to look at what “short selling” means. When a trader is expecting the stock prices to fall, he may sell the stock without owning that and buy at a lower price, for example, stock XYZ is trading at 100, a trader sells the stocks at Rs 100 and buys it back at Rs 90. He made a profit of Rs 10. Selling the stocks without owing the underlying stock is called short selling.
In Monday's trading session, the following five stocks witnessed a build of fresh short positions. Let us first understand how this conclusion is reached whether the stock has seen a buildup of fresh short position or not.
When the stock prices move up and open interest on the counter also moves upward, it is taken as a sign of a long buildup. The signal is considered more reliable if the volume on the counter has also seen an increase.
When the stock prices move downward and open interest on the counter increases, it is a sign of a short build-up. The signal is considered more reliable if the volume on the counter has also seen an increase as the stock price declines.
When the stock prices move downward and open interest on the counter increases, it is taken as a sign of a short build-up.