The Hindu Business Line : Small reversal likely in HCL Tech, Tata Motors

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 on Friday so as to trade 2-3 points below the recommended entry price, traders should enter the short position after the price breaks below the 5-minute low. Likewise, if the futures price gaps up, the long position can be initiated after the price breaks above the 5-minute high. If the futures price gaps up in the case of a short-sell recommendation 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. For long positions, the stop-loss should be placed at day's low if that price is lower than the stop-loss 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.

HCL Tech: Buy June futures if it trades above 386.50. The upside target is 388-389. Place the protective stop at 384. The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 650 units.

Hero Honda: Sell June futures if it trades below 578. The downside target is 572-568. Place the protective stop at 584. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 400 units.

Infosys: Buy June futures if it trades above 2,344. The upside target is 2,352-2,358. Place the protective stop at 2,338. The open interest position is about 5 per cent of the market-wide limit. The minimum order size is 100 units.

Reliance Capital: Sell June futures if it trades below 313. The downside target is 310-307. Place the protective stop at 315.50. The open interest position is about 70 per cent of the market-wide limit. The minimum order size is 1,100 units.

Tata Motors: Sell June futures if it trades below 426. The downside target is 423-421. Place the protective stop at 430. The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 825 units.

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

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