Financial Daily from THE HINDU group of publications
Saturday, Jun 18, 2005
Financial Daily from THE HINDU group of publications Saturday, Jun 18, 2005 |
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Markets
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Derivatives Markets Columns - On the hedge Small reversal likely in Grasim, Tata Motors 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 up on Monday so as to trade 2-3 points above the recommended entry price, traders should enter the position after the price breaks above the 5-minute high. If the futures price gaps down and then triggers the recommended entry level, the protective stop should be placed at the day's low at the time the position is initiated, if that price is 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. Grasim: Buy June futures if it trades above 1082. The upside target is 1088-1092. Place the protective stop at 1077. The open interest position is about 40 per cent of the market-wide limit. The minimum order size is 175 units. Tata Motors: Buy June futures if it trades above 408. The upside target is 410-412. Place the protective stop at 405. The open interest position is about 20 per cent of the market-wide limit. The minimum order size is 825 units. LIC Housing: Buy June futures if it trades above 233.50. The upside target is 236-238. Place the protective stop at 230. The open interest position is about 20 per cent of the market-wide limit. The minimum order size is 850 units. India Cement: Buy June futures if it trades above 74.50. The upside target is 76-77. Place the protective stop at 72. The open interest position is about 20 per cent of the market-wide limit. The minimum order size is 2,900 units. (The opinion expressed in this column is based on technical analysis. There is risk of loss in trading.)
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