F&O cues: Markets in no-trading zone, go short

Stock markets traded extremely volatile on Tuesday after two consecutive days of declines. In such a directionless market, it's difficult to take a call on individual stocks and stay immune from intra-day vlatility jitters

 

So should one sit tight ahead of the September derivate expiry or is there any trade on the index?

 

Check out the trading strategies with Shshank Mehta, Derivatives Strategist, Shah Investor's Home.

 

SmartInvestor : Markets are extremely volatile in today's trade. Are we in a slight no-trading zone?

 

Shshank Mehta : That is correct! We observe strong resis tance in Bank Nifty Futures at 10500-10530 levels and will be ideal to create short positions with stop loss of 10600. Corresponding level in Nifty is 5990-6000. We acknowledge that markets are trading lower with sharp intra-day pull backs making it difficult for traders to gauge market direction. We, however, advise traders not to create long positions and suggest to short on the markets using NTM (Near-The-Money) Put Options to counter the volatility in oscillations. Creating such positions by buying Put Options of Oct'13 Series will be more prudent.

 

SmartInvestor : Bank Nifty has fallen nearly 10% post RBI policy. Are you seeing fresh buildup of short positions on Bank Nifty and heavyweights like State Bank of India (SBI) and ICICI Bank?

 

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