Date:24/05/2005 URL: http://www.thehindubusinessline.com/2005/05/24/stories/2005052402191300.htm

Back Small price reversal likely in BHEL, ONGC

B. Venkatesh

THE following strategies are based on Monday'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 Tuesday 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.

BHEL: Sell May futures if it trades below 872. The downside target range is 868-864. Place a protective stop at 876. The open interest position is about 15 per cent of the market-wide limit. The minimum order size is 300 units.

BPCL: Sell May futures if it trades below 396.50. The downside target range is 393-390. Place a protective stop at 400. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 550 units.

ONGC: Sell May futures if it trades below 875. The downside target range is 869-865. Place a protective stop at 879. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 300 units.

Satyam Computer: Sell May futures if it trades below 459. The downside target range is 455-452. Place a protective stop at 462.50. The open interest position is about 20 per cent of the market-wide limit. The minimum order size is 600 units.

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