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Trade in IDBI, L&T and SBI ahead of RBI policy meet, say experts

100 per cent respondents to ET Now poll expect the key rates and cash reserve ratio to remain unchanged.

ET Online|
Updated: Aug 05, 2014, 09.10 AM IST
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MUMBAI: The Nifty staged a strong pull-back and closed over 88 points up ahead of the Reserve Bank of India’s policy meet.

ET Now poll suggests that the central bank may stay put on interest rates. However, Governor Raghuram Rajan is expected to announce liquidity enhancing measures to set the stage for an easier rate regime

100 per cent respondents to ET Now poll expect the key rates and cash reserve ratio to remain unchanged.

75 per cent expect the Statutory Liquidity Ratio (SLR) to remain unchanged. 20 per cent of respondents expect 50 bps cut and remaining 5 per cent see a 25 bps cut.

Following are the strategies from market experts on how to trade the market ahead of the key event:

Shrikant Chouhan, Head- Technical Research, Kotak Securities:

A lot of F&O positions are built-up at 7,600 put and 8,000 call option. If the market corrects, it can fall upto 7,400.

Traders can buy 7,600 put, Nifty futures and sell 8,000 call options. If there is profit booking, hold onto to put options and exit futures.

8,000 will act as a major hurdle for next few months. It will require a solid newflows to be taken out.

There is a consensus that the policy rates will remain unchanged and the market has already corrected ahead of the event.

Traders can buy call option of SBI and put option of L&T.

Buy SBI call option (strike price Rs 2500) around Rs 72 and keep a stoploss of Rs 60.

Buy L&T put option (strike price Rs 1450) at Rs 35 and keep stoploss of Rs 27.

Vikas S. Salunkhe, Technical Research Analyst, Nirmal Bang

Technically, Daily chart indicates that Nifty has a good support at 7,580 levels provided by the 50-DMA. The trend line also indicates that Nifty is taking a support of the upward sloping trend line connecting the two lows (low- 7,118, low-7,422) i.e. 7,600 mark.

Both the technical indicators show that Nifty has support of 7,600-7,580 levels on closing basis. On the flip side, 7,750 is the likely target. Any move above the same will extend its rally towards 7,800 and above. We believe one should hold the longs with the mentioned support levels.

Stocks: IDBI: CMP 90.

Daily chart indicates that stock has corrected a quite from last few weeks from Rs 110 levels to Rs 87 levels. Now it is consolidating in the range of Rs 87-92 levels. Momentum Indicators such as RSI indicates that it trading in the oversold zone area from where we may get some bounce back rally.

Short term traders can buy the stock at the current levels for the target of Rs 95/98 levels with the strict stoploss of Rs 86 levels on closing basis.

Also Read

Rupee falls 5 paise ahead of RBI policy meet

Market Now: Auto stocks move up ahead of RBI policy meet

Stock market update: Bank stocks mixed ahead of RBI policy meet outcome; SBI flat

Market Now: Nifty Auto in red post RBI policy meet

RBI policy meet: Realty stocks pare gains after policy decision

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