Financial Daily from THE HINDU group of publications
Saturday, Jun 04, 2005
Financial Daily from THE HINDU group of publications Saturday, Jun 04, 2005 |
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Markets
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Derivatives Markets Columns - On the hedge Small reversal likely in Century Textiles, HDFC Bank B. Venkatesh
THE following strategies are based on Friday's trading in the derivatives segment on the NSE. These strategies are constructed to take advantage of small reversal in futures prices. The positions may run counter to the primary trend. Protective stops are, hence, important. If futures price gaps down on Saturday to trade 2-3 points below the recommended entry price, traders should enter the position after the price breaks below the 5-minute low. Likewise, if the futures price gaps up and then triggers the recommended entry level, the protective stop should be placed at day's high at the time the position is initiated, if that price is higher than the stop-loss level recommended below. Options-based strategies are not available on these positions because the price targets are not far away from the recommended entry levels. Century Textiles: Sell June futures if it trades below 257.50. The downside target is 255-253. Place the protective stop at 261. The open interest position is about 35 per cent of the market-wide limit. The minimum order size is 850 units. HDFC Bank: Sell June futures if it trades below 540.50. The downside target is 538-535. Place the protective stop at 544. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 800 units. Reliance Capital: Sell June futures if it trades below 212. The downside target is 209-207. Place the protective stop at 215. The open interest position is about 20 per cent of the market-wide limit. The minimum order size is 1100 units. Nicholas Piramal: Sell June futures if it trades below 263.50. The downside target is 260-258. Place the protective stop at 267. The open interest position is about 5 per cent of the market-wide limit. The minimum order size is 950 units. It is better to trade this position in smaller lots, as the contract is not very liquid. (The opinion expressed in this column is based on technical analysis. There is risk of loss in trading.)
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