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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 up on Thursday so as to trade 2-3 points above the recommended entry price, traders should enter the long 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 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.

Reliance Capital: Buy August futures if it trades above 442. The upside target is 446-450. Place the protective stop at 437.

The open interest position is about 70 per cent of the market-wide limit. The minimum order size is 1,100 units.

ICICI Bank: Buy August futures if it trades above 496. The upside target is 499-502. Place the protective stop at 492. The open interest position is about 20 per cent of the market-wide limit. The minimum order size is 700 units.

Ranbaxy Labs: Buy August futures if it trades above 505. The upside target is 507-509. Place the protective stop at 502. The open interest position is about 40 per cent of the market-wide limit. The minimum order size is 400 units.

Hero Honda: Buy August futures if it trades above 623. The upside target is 626-627. Place the protective stop at 620. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 400 units.

Canara Bank: Buy August futures if it trades above 247. The upside target is 249-250. Place the protective stop at 244. The open interest position is about 5 per cent of the market-wide limit. The minimum order size is 1,600 units.

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

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