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B. Venkatesh

THE following strategies are based on Monday'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 up (down) on Tuesday so as to trade 2-3 points above (below) the recommended entry price, traders should enter the position after the price breaks above (below) the 5-minute low. Likewise, if the futures price gaps down (up) and then triggers the recommended entry level, the protective stop should be placed at the day's low (high) at the time the position is initiated, if that price is lower (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.

Bajaj Auto: Sell June futures if it trades below 1257. The downside target is 1248-1246. Place the protective stop at 1261. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 200 units.

Cummins India: Sell June futures if it trades below 139. The downside target is 136-134. Place the protective stop at 142. The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 1,900 units.

Orchid Chemicals: Buy June futures if it trades above 335. The upside target is 338-340. Place the protective stop at 331. The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 700 units.

Grasim: Buy June futures if it trades above 1085. The upside target is 1090-1093. Place the protective stop at 1080. The open interest position is about 35 per cent of the market-wide limit. The minimum order size is 175 units.

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

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