NEW YORK (Reuters) - Short interest on the New York Stock Exchange fell at the end of March, while bearish bets on the Nasdaq rose in the same period, suggesting investors remain wary of making large bets against the market rally.

As of March 31, short interest on the NYSE decreased to 13.90 billion shares, from a revised 14.13 billion shares as of March 15, the exchange said.

The short interest is equal to 3.64 percent of the total shares outstanding.

Meanwhile, on the Nasdaq, short interest rose 1 percent to 6.96 billion shares, from 6.89 billion shares in mid-March. This is 3.01 days' average daily volume, compared with an average of 2.97 days for the previous reporting period.

Investors who sell securities short seek to profit from falling share prices. Short-sellers borrow shares, sell them and buy them back at a lower price, pocketing the difference. If the price of the shares rises, however, a short-seller loses money.

A rally of more than 70 percent in the broader market from last March's 12-year lows has made for a difficult environment for short-sellers. During the reporting period covered by the exchanges, the S&P 500 rose 1.6 percent and was up 5.9 percent for the month overall.

(Reporting by Leah Schnurr and Ryan Vlastelica; Editing by Steve Orlofsky)