Sir if forward price is overpriced then equilibrium price will be reached when share price will increase and forward price will fall.
But how can forward price will fall when share price is increase as forward price derives its value from share price?
Ya there will equilibrium only when share price will increase according to equation F- = S + int saved.
Let’s understand with the help of example
Suppose the price of a particular cloth in kolkata is 1,000 and the same cloth which is selling in Mumbai is 1,500( ignoring transportation cost) so in that case what will do purchase you purchase that cloth in kolkata and sell it in mumbai so everyone will start doing that price of cloth in kolkata will increase and everyone start selling in mumbai the price will decrease there
So same thing happening here if price of a forward contract is more so everyone will start shorting forward contract (Mumbai) and everyone will purchase share(kolkata) till when price reach equilibrium