Mantra by derivative lead analyst: Work religiously irrespective of temporary failures, have risk management systems in place

Happy Women's Day

On the stock market mantras, "Continue working your way religiously irrespective of temporary failures, and maintain discipline and do a lot of preparation before entering the markets," says Shilpa Rout, the Derivative Lead Analyst and AVP – Research at Prabhudas Lilladher, in an interview to Moneycontrol.

Further, she says one should make sure to have risk management systems in place before taking a position. "This makes losses bearable and the victories more joyous."

Being passionate about derivatives after a decade of struggle, Rout suggests taking Bull Call spread on Nifty monthly expiry with buying 22,500 CE buy and selling 23,100 CE.

What is the trigger that brought you in the derivative field? Is it a passion for you?

The saying ‘charity begins at home’ perfectly sums up how I started my journey on the derivatives side. My sister joined this field with a reputed broking firm and that piqued my interest. I followed her footsteps and did a few internships to gather more experience. This field challenges me every minute and no day is the same. After spending a decade, I can say that I am very passionate about this and feel excited to login to work every single day.

Also has your journey been very smooth in the field that attracts lot of people but few of them survive with best practices?

Futures and options are highly volatile so one should not assume that they know everything from day one. My journey has seen a fair amount of ups and downs, but it has all been a great learning experience at the end of the day.

The most important thing is that I have been willing to learn something new every day. I also make sure to have risk management systems in place before taking a position. This makes losses bearable and the victories more joyous.

What is your advice to women who want financial freedom and are very excited to enter the derivative field?

Continue working your way religiously irrespective of temporary failures. Maintain discipline and do a lot of preparation before entering the markets. Learn to embrace the fact that one bad day or one wrong trade does not define the rest of the year, if you have been disciplined.

Coming back to the markets, do you expect the Nifty 50 climbing above 23,000 in March after reading options data?

As per rollover analysis, I was looking at Nifty targets till 22,500 – 22,800 first. Any further correction or upside will be re-evaluated then.

Which are your top two positional bets for March and why?

Since volatility is at its peak now, a good balance approach is important. Hence, my first pick would be as a defence play:

Buy Dabur India with a support at Rs 525-520 zones and look for upside targets till Rs 585/600.

Buy Glenmark Pharma with a support of Rs 920 and target of Rs 1,020/1,035.

What is your Nifty or Bank Nifty strategy for next week?

FIIs net long position as on date is at 40 percent, which is quite steady. If it crosses 45 percent, then a strong short covering rally can come which will propel markets to a new highs and Nifty can test 23,000.

Bank Nifty is also on a strong momentum and can move towards 49,500/50,000 zones from here. We have been recommending largecap private banks and PSUs to our clients on a regular basis, and I still feel Axis Bank and SBI can see further meaningful upside from here in the March series.

The other sectors participating strongly now are chemicals, FMCG, technology, energy. So, I retain my view to go long in Tata Power, Reliance Industries, SRF, GNFC, Infosys, and Birlasoft.

For option traders, Bull Call spread on Nifty monthly expiry with 22,500 CE buy and 23,100 CE sell can be done (do not forget to keep stop losses as per risk appetite).

A Bull Call spread comprises buying one Call option with a lower strike price and simultaneously selling a Call option with a higher strike price.

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