Stock market today: Suzlon, PB Fintech, PFC, Mazagon among 17 stocks that may see short covering

Stock market today: Suzlon Energy Ltd, UPL Ltd, Policybazaar, Power Finance Corporation Ltd (PFC) and Mazagon Dock Shipbuilders Ltd are among 17 F&O stocks that could witness short-covering activity on Thursday, November 5, amid indications of a strong gap-up opening, according to Bajaj Broking.

Gift Nifty was trading at 24,282.50 around 8:45 am, indicating a gap-up of nearly 313 points over the Nifty near-month futures' previous close of 23,970. Such a sharp opening could force traders holding short positions to cover their bets, particularly in stocks trading near their yearly lows.

The brokerage's derivative research note identified stocks with open interest (OI) at or above the 80th percentile of their one-year range and prices at or below the 20th percentile. These conditions indicate elevated positioning alongside weak price action, a potential setup for short covering.

UPL topped the list with OI at the 100th percentile and its price at the sixth percentile of its yearly range. Policybazaar, PFC and Mazagon Dock also featured among the strongest candidates, with OI at the 92nd percentile or higher and prices near the bottom of their yearly bands.

PI Industries Ltd, Suzlon Energy, Tata Motors Passenger Vehicles, Hindustan Unilever, Swiggy Ltd and Crompton Greaves Consumer Electricals were among the other stocks on the brokerage's shortlist.

Bajaj Broking noted that PFC and UPL have relatively high volume percentiles, indicating actively traded positions that could unwind quickly. PI Industries and Policybazaar, meanwhile, have high delivery percentiles, suggesting that any short covering could be accompanied by fresh buying.

Stocks nearing key call OI strikes
The brokerage also identified 20 stocks that closed within 1 per cent below their highest Call OI strikes for the November series on November 4, with their futures rising during the session.

KEI Industries, Bharat Electronics Ltd (BEL) and L&T Finance (LTF) emerged as potential breakout candidates, as call writers were already exiting positions at key strikes while futures rose and open interest declined.

However, Hindustan Aeronautics Ltd (HAL), Uno Minda, ICICI General Insurance and HDFC Bank face relatively strong resistance at their respective highest Call OI strikes, following significant fresh call writing. ICICI General Insurance also features in the short-covering shortlist, making it a key stock to watch.

What investors should watch
Bajaj Broking said a rise in stock prices accompanied by falling open interest during the first hour of trade would confirm short covering. A price rise alongside increasing OI, however, would indicate fresh long positions rather than short covering.

The brokerage cautioned that high OI near yearly lows does not conclusively establish short positions, as open interest represents both sides of a derivatives contract. Stock-specific developments and volatility around the Sensex weekly expiry could also influence intraday movements.

Bajaj Broking clarified that the research is for information purposes and does not constitute a recommendation to buy or sell any security.