The Hindu Business Line : Small reversal likely in Nicholas Piramal, Orchid Chem

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 (up) on Monday so as 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 away from the recommended entry levels.

MphasiS BFL: Buy June futures if it trades above 273. The upside target is 276-278. Place the protective stop at 269.

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

Nicholas Piramal: Buy June futures if it trades above 252. The upside target is 254-256. Place the protective stop at 249.

The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 950 units.

IPCL: Buy June futures if it trades above 163.50. The upside target is 165-166.

Place the protective stop at 161.50.

The minimum order size is 2,200 units.

Note that NSE had banned fresh buying/selling on this contract because the open interest position had crossed 95 per cent of the market-wide limit. Traders should, therefore, check whether fresh positions are allowed before placing buy orders.

Orchid Chemicals: Buy June futures if it trades above 340.50. The upside target is 343-345. Place the protective stop at 337.

The open interest position is about 20 per cent of the market-wide limit. The minimum order size is 700 units.

Titan Industries: Sell June futures if it trades below 348.50. The upside target is 346-344. Place the protective stop at 351.

The open interest position is about 40 per cent of the market-wide limit.

The minimum order size is 800 units.

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

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