Day trading guide: Nifty may stage a mild pullback, buy on dips

Amit Trivedi, Yes Securities

A swift rally and the appearance of another bullish candle led to a shift in Nifty's range on the upside. The index's sustained move above the important averages is likely to keep the near term outlook positive. A mild pullback and some price consolidation cannot be ruled out to digest recent gains.

The strategy, however, remains to buy on dips. The levels of 11,500-11,550 are likely to act as immediate floor, while on the higher side Nifty could make an attempt to revisit the levels of August month’s high of 11,794.

Index Strategies :
Nifty put ratio spread
(Expiry 15th October)

• Buy Strike 11,700 Put
• Sell Put 11,500
• 1:2 lots for (15th Oct) in outflow of ~2 points.
• TARGET: 100/140 on spread
• STOP LOSS: 11300 on Nifty futures

Upside fixed loss of 2 points on 15th Oct expiry above 11,700 mark, downside breakeven for the strategy at 11,300 level. The above strategy would be beneficial if Nifty drags lower to digest recent gains.

Stock Strategies:
Bull Call Spread on M&M
(Expiry: 29th October)

• Buy 630 call (CMP: 25)
• Sell 670 call (CMP: 11)
• Options at net spread of: 14
• TARGET on spread: 35
• STOP LOSS on spread: 4

The stock defended the level of Rs 600 in the recent consolidation. A positive traction is visible since the past couple of days along with a positive internal breadth of the Auto space. The ongoing up move could continue till Rs 670-680 zone, hence initiating bull call spread strategy at current juncture seems to be a prudent strategy to follow.