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B. Venkatesh

THE following strategies are based on Tuesday's trading in the derivatives segment on the NSE:

HDFC Bank: The March futures contract closed at 593. The outlook may turn positive if futures trades above 598.20. In the event, it could move to 620.

Buy March futures after it moves above 598.20. Initiate the position with protective stop at 590. Trail the stop to control the downside risk.

The margin on the futures contract is approximately 16 per cent of the contract value. The minimum order size is 800 units.

No alternative strategies are available, as options on the stock are not actively traded.

Nifty Index: The March contract closed at 2120. The outlook could turn positive if futures trades above 2139. In the event, it could move to 2170.

Buy March futures after it moves above 2139. Initiate the position with protective stop at 2117. Traders can alternatively place a stop at the day's low at the time the position is initiated. The position has to be traded with trailing stops to control the downside risk.

The margin on the futures position is approximately 10 per cent of the contract value. The minimum order size is 200 units.

Traders can construct ratio call spread as alternative strategy. This position can be initiated with one long March 2130 calls, one short March 2180 calls and one short March 2190 calls.

The spread can be set up for 12 points. The spread can payoff 14 points net if the Nifty spot index moves to 2185 within 5-6 days from the date of initiation. Note that the target level for the spot index is higher than that for the futures.

Those who prefer to trade on intra-day movement can consider buying March futures if it trades above 2117. The position can be initiated for a target of 2126. The initial protective stop should be placed at 2111.

Note that the risk-return trade-off is not attractive.

(The opinion expressed in this column is based on technical analysis. There is risk of loss in trading.)

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