NIFTY has turned down. I don't want to bet on NIFTY, it will again decide tomorrow at 11 am when inflation numbers will be announced. IIP data was good, so as per simple economics, inflation should be reduced. Because supply is more, demand should be same and as per basic economic principle supply is more than demand and it should reduce inflation
If inflation is in control RBI will get reason cut rate at least by 25 basis point and market will cheer that. There could be indirect pressure on RBI to adjust interest rate. If RBI succumbs to the pressure then we can see 50 basis point rate cut and again 6000/6050 levels in NIFTY. Rate cut is almost certain and market will start reacting positively from beginning of next week.
So it will be advisable to book profit in short position in next two trading days and not to take risk in speculating what RBI will do.
One low risk strategy:
Bear spread strategy for Ranbaxy:
Company had all sorts of problem, stock went down to 380 level and bounced back, perhaps it will reach up to 430 before it will retrace back.
Buy 420 PUT at 10.50-11 and sell 400 Put at 4.50-5. Maximum loss could be around 3000/- and maximum profit could be around 7000/- if stock closes below 400 at expiry.
This stock has less relevance on RBI policy, risk reward ratio is good. Chances of hitting 400 is above 60%. One need not wait till expiry and the soonest one sees profit of 2%, should exit the trade.
PFC: May give another opportunity to book profit very soon. One should grab it and not wait till RBI policy and stock going down below 180. If it goes below 180, then 165/160 levels are easily possible.
Disclaimer: This blog does not take any responsibility of your profit/loss
If inflation is in control RBI will get reason cut rate at least by 25 basis point and market will cheer that. There could be indirect pressure on RBI to adjust interest rate. If RBI succumbs to the pressure then we can see 50 basis point rate cut and again 6000/6050 levels in NIFTY. Rate cut is almost certain and market will start reacting positively from beginning of next week.
So it will be advisable to book profit in short position in next two trading days and not to take risk in speculating what RBI will do.
One low risk strategy:
Bear spread strategy for Ranbaxy:
Company had all sorts of problem, stock went down to 380 level and bounced back, perhaps it will reach up to 430 before it will retrace back.
Buy 420 PUT at 10.50-11 and sell 400 Put at 4.50-5. Maximum loss could be around 3000/- and maximum profit could be around 7000/- if stock closes below 400 at expiry.
This stock has less relevance on RBI policy, risk reward ratio is good. Chances of hitting 400 is above 60%. One need not wait till expiry and the soonest one sees profit of 2%, should exit the trade.
PFC: May give another opportunity to book profit very soon. One should grab it and not wait till RBI policy and stock going down below 180. If it goes below 180, then 165/160 levels are easily possible.
Disclaimer: This blog does not take any responsibility of your profit/loss
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