Date:09/06/2005 URL: http://www.thehindubusinessline.com/2005/06/09/stories/2005060901631300.htm

Back Small reversal likely in ICICI Bank, Satyam

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 down on Thursday 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.

Option-based strategies on these positions will not be optimal because the price targets are not far away from the recommended entry levels.

ICICI Bank: Sell June futures if it trades below 406.50. The downside target is 404-401. Place the protective stop at 410. The open interest position is about 30 per cent of the market-wide limit. The minimum order size is 700 units.

Infosys: Sell June futures if it trades below 2285. The downside target is 2275-2267.

Place the protective stop at 2295. The open interest position is about 5 per cent of the market-wide limit. The minimum order size is 100 units.

Patni Computer: Sell June futures if it trades below 369.50. The downside target is 365-363.

Place the protective stop at 374. The open interest position is about 10 per cent of the market-wide limit. The minimum order size is 650 units.

Reliance Energy: Sell June futures if it trades below 574. The downside target is 569-565.

Place the protective stop at 579. The open interest position is about 30 per cent of the market-wide limit. The minimum order size is 550 units.

Satyam Computer: Sell June futures if it trades below 469. The downside target is 465-463.

Place the protective stop at 473. The open interest position is about 10 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.)