The Hindu Business Line : Small reversal likely in ACC, ONGC

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

Option-based strategies on these positions will not be optimal because the price targets are not far from the recommended entry levels.

ACC: Sell June futures if it trades below 379. The downside target is 377-375. Place the protective stop at 383.

The open interest position is about 20 per cent of the market-wide limit. The minimum order size is 750 units.

HDFC Bank: Buy June futures if it trades above 572. The upside target is 574-576. Place the protective stop at 568.

Alternative strategy would be to initiate the position after the price moves above 581.25. The target would then be 583-584. The stop, however, remains the same, which makes this strategy very risky.

The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 800 units.

ONGC: Buy June futures if it trades above 902.50. The upside target is 906-908. Place the protective stop at 898.

The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 300 units.

GNFC: Sell June futures if it trades below 99. The downside target is 97-96. Place the protective stop at 101.

The open interest position is about 30 per cent of the market-wide limit. The minimum order size is 2950 units.

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

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