Financial Daily from THE HINDU group of publications
Thursday, Jun 23, 2005
Financial Daily from THE HINDU group of publications Thursday, Jun 23, 2005 |
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Markets
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Derivatives Markets Columns - On the hedge Small reversal likely in Bajaj Auto, M&M B. Venkatesh
THE following strategies are based on Wednesday'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 Thursday so as to trade 2-3 points below the recommended entry price, traders should enter the position after the price breaks below the 5-minute low. 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. Option-based strategies on these positions will not be optimal because the price targets are not far away from the recommended entry levels. Bajaj Auto: Sell June futures if it trades below 1248. The downside target is 1238-1234. Place the protective stop at 1255. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 200 units. Cipla: Sell June futures if it trades below 312. The downside target is 309-307. Place the protective stop at 316. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 1000 units. Glaxo: Sell June futures if it trades below 782. The downside target is 776-773. Place the protective stop at 785. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 100 units. Maruti Udyog: Sell June futures if it trades below 463. The downside target is 460-458. Place the protective stop at 466. The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 800 units. M&M: Sell June futures if it trades below 565. The downside target is 562-560. Place the protective stop at 569. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 625 units. (The opinion expressed in this column is based on technical analysis. There is risk of loss in trading.)
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