The Hindu Business Line : Small reversal likely in Cipla, Titan

THE following strategies are based on Tuesday'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 Wednesday 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. 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.

Cipla: Sell July futures if it trades below 329. The downside target is 327-325. Place the protective stop at 333.

The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 1,000 units.

Bank of Baroda: Sell July futures if it trades below 215. The downside target is 213-212. Place the protective stop at 218. The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 1,400 units.

ICICI Bank: Sell July futures if it trades below 455. The downside target is 453-450. Place the protective stop at 459. The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 700 units.

Titan Industries: Sell July futures if it trades below 547. The downside target is 541-536. Place the protective stop at 555. 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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