Financial Daily from THE HINDU group of publications
Tuesday, Mar 01, 2005
Financial Daily from THE HINDU group of publications Tuesday, Mar 01, 2005 |
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Markets
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Derivatives Markets Columns - On the hedge Outlook may turn positive for Mastek B. Venkatesh
THE following strategies are based on Monday's trading in the spot and the derivatives segments on the NSE: Mastek: The stock closed at Rs 385 in the spot market. The outlook may turn positive if the stock trades above Rs 387. In the event, the stock may move to Rs 405. Buy March futures after the stock moves above Rs 387 in the spot market. Initiate the position with spot-market-stop-loss at Rs 372, which is Monday's low. Note that the initial protective stop is far away from the recommended entry level. Traders can alternatively place the protective stop at the day's low at the time the position is initiated. Thereafter, the position should be traded with trailing stops to control the downside risk. The margin on the futures position is approximately 17 per cent of the contract value. No alternative strategies are available, as options on the stock are not actively traded. Nifty: Sell March futures if the spot index trades below 2,103.25. The downside spot-index target is 2,072. Initiate the position with spot-market-stop-loss at 2,110. The position has to be traded with trailing stops to control the upside risk. The margin on the futures position is approximately 10 per cent of the contract value. The minimum order size is 200 units. Note that this recommendation is set up to take advantage of likely short-term reversal. This strategy is, hence, valid for only two trading days but it is preferable not to carry the position overnight. It is not optimal to set up options-based position because the price target is not far away from the entry level. (The opinion expressed in this column is based on technical analysis. There is risk of loss in trading.)
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