The Hindu Business Line : Short reversal likely in TCS, Infosys

The strategies are structured to take advantage of short reversals in futures prices. The position can run counter to the primary trend. Protective stops are, hence, important to control risk.

If futures gap up so as to trade away from the recommended entry price, traders can initiate the position after the price breaks above the five minute high. The position should not be carried overnight because of the high volatility in the underlying.

Options-based strategies are not optimal because the target levels are not far away from the recommended entry price.

TCS: Buy April futures if it trades above 1397. The upside target range is 1405-1412. Initiate the position with protective stop at 1390.

The margin on the futures position is approximately 16 per cent of the contract value. The minimum order size is 250 units. The open interest position as a percentage of the market-wide limit is about 15 per cent.

Infosys: Buy April futures if it trades above 2120. The upside target range is 2133-2145. Initiate the position with protective stop at 2110.

The margin on the futures position is approximately 17 per cent of the contract value. The minimum order size is 100 units. The open interest position as a percentage of the market-wide limit is about 10 per cent.

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

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