Financial Daily from THE HINDU group of publications
Wednesday, May 25, 2005
Financial Daily from THE HINDU group of publications Wednesday, May 25, 2005 |
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Markets
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Derivatives Markets Columns - On the hedge Small reversal likely in Reliance Cap, Tata Motors B. Venkatesh
THE following strategies are based on Tuesday's trading in the derivatives segment on the NSE. The strategies are constructed to take advantage of small reversal in futures prices. These 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 position after the price breaks below the 5-minute low. Likewise, 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. Options-based strategies are not available on these positions because the price targets are not far away from the recommended entry levels. Reliance Capital: Sell May futures if it trades below 190.50. The downside target range is 187-184. Place a protective stop at 194. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 1,100 units. Tata Motors: Sell May futures if it trades below 443.50. The downside target range is 440-438. Place a protective stop at 447. The open interest position is about 20 per cent of the market-wide limit. The minimum order size is 825 units. Indian Hotels: Sell May futures if it trades below 639. The downside target range is 636-634. Place a protective stop at 643. The open interest position is about 45 per cent of the market-wide limit. The minimum order size is 350 units. (The opinion expressed in this column is based on technical analysis. There is risk of loss in trading.)
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