Long unwinding is the process of selling stocks or positions that have been held for an extended length of time, either to record a profit or to get out in expectation of a bear market. During Friday’s trading session, there was a lengthy unwinding in five equities. This is the list:
- PFC
An RBI-registered infrastructure finance company, Power Finance Corporation Limited is a Systemically Important Non-Deposit Taking NBFC. It is working to provide financial support to the Indian power industry. -1.48% was the OI change for January 10. The stock price changed by -4.15%.
- HFCL
A multifaceted telecom infrastructure enabler, HFCL Ltd (Himachal Futuristic Communications Limited) is actively involved in system integration, telecom infrastructure development, and the production and distribution of high-end telecom equipment, including optical fiber and optic fiber cable (OFC).On January 10, OI changed: -1.38% Stock price change: -4.31%
- Laurus Labs
Established in 2005, Laurus Labs is a research-based pharmaceutical and biotechnology business that leads the world in a few Active Pharmaceutical Ingredients (APIs), such as antiretroviral, cardiovascular, cancer (including high potency APIs), and gastrointestinal treatments. Additionally, from clinical phase drug research to commercial manufacturing, they provide Global Innovators with comprehensive CMO and CDMO services. On January 10, the OI changed by -0.46%. Stock price change: -4.57%
- BEL
Bharat Electronics Ltd. was founded in 1954 and produces and provides electronic systems and equipment to the defense industry. Additionally, the company is not very well-known in the civilian sector. January 10th OI change: -0.08% Price change for the stock: -3.98%
- DLF
DLF Ltd. is involved in real estate development, from the search and purchase of property to the designing, carrying out, building, and marketing of projects, in collaboration with its subsidiaries, affiliates, and joint ventures. Additionally, it deals in leasing, electricity generation, maintenance services, hotel, and recreational activities that are all connected to the general growth of the real estate industry. OI changed by -1.1% on January 10. The stock price changed by -3.53%.
What is Long Unwinding?
The process by which traders or investors who have long positions in a specific stock or security begin to sell their holdings is known as “long unwinding” in the share market. Their previously held long holdings are reduced or unwound as a result of this selling pressure. Long unwinding usually happens when investors think the stock has peaked or when they expect the price of the stock to decline.
Impact of Long Unwinding on Stock Prices
Long unwinding typically causes stock prices to decline. The market’s stock supply rises as a result of investors’ heavy selling. Stock prices are inevitably going to suffer if there are not enough buyers to offset the selling pressure. If the selling doesn’t stop, this might lead to a correction in the whole market. In sparsely traded stocks, where even slight selling can cause sharp price declines, the impact of long unwinding is especially noticeable.
Because market participants would continually rebalance their positions in response to shifts in market sentiment, the protracted unwinding process may potentially be extremely turbulent and unpredictable. Additionally, other investors may get anxious or even panicked as a result of dropping prices brought on by an increase in supply.
