Trading Strategy | F&O Setup and how to position for Budget Day?- Grow Mudra

Trading Strategy | F&O Setup and how to position for Budget Day?

19 Jul , 2024 By : Debdeep Gupta

Indian benchmark indices are trading negatively amid volatility on July 19, ahead of the Union Budget. After a muted start in today's trading session, the Nifty index retraced to 24,630, which is the 61.8 percent retracement level of yesterday's rally from 24,530 to 24,820.

According to Arun Kumar Mantri, Founder of Mantri Finmart, "Expect markets to remain range-bound as we approach the budget day, with more stock and sector-specific action likely in the near term."

"Market participants are expected to take direction from the budget day. The key factors to note will be tax reforms from the first budget of Modi 3.0, followed by the government's stance on fiscal prudence," added Mantri.

Pre-Budget Positioning

Mantri notes, "The Nifty is expected to trade with a bullish bias ahead of the budget and may remain volatile within the range of 24,400-25,000 in the near term, with stock-specific action clearly in focus for the next couple of sessions as we approach the big day."

Strategy on Nifty Recommended by Mantri:

"We expect the market to witness some buying interest at lower levels, and a short-term bounce may take place towards higher levels from the current juncture. We recommend building a bull call strategy on the index at current levels."

Buy one lot of NIFTY 25 July 24700 CE at Rs 205

Sell one lot of NIFTY 25 July 25000 CE at Rs 95

Stop Loss: 50 (Premium)

Break Even Point: 24,810 (Spot levels)

Sectoral and Stock-Specific Action

Mantri believes that sectors like PSU banks, FMCG, and Oil & Gas are expected to perform well in the coming days. Any major decline in these sectors will present a good opportunity for short- and long-term investors to accumulate quality stocks.

Stock-Specific Action

Mantri recommends the following trading bets for short-term traders:

CHAMBAL FERT: BUY at Rs 495, Stop Loss: Rs 445, Target: Rs 575

TATA POWER: BUY at Rs 418, Stop Loss: Rs 399, Target: Rs 450

HAL: BUY at Rs 4820, Stop Loss: Rs 4600, Target: Rs 5350

DABUR: BUY at Rs 642, Stop Loss: Rs 603, Target: Rs 720

BEL: BUY at Rs 306, Stop Loss: Rs 280, Target: Rs 342SBI: BUY at Rs 885, Stop Loss: Rs 824, Target: Rs 1005