Indian stock market benchmark indices Sensex and Nifty 50 are witnessing heightened volatility ahead of the presentation of Union Budget 2024 by Finance Minister Nirmala Sitharaman on Tuesday, July 23.
Budget 2024 will be the first full budget of Modi 3.0 government and is widely expected to be growth-oriented with key focus on capex and fiscal prudence. The stock market is expected to remain volatile during the budget presentation as sector specific announcements tend to impact the stocks.
“Budget days are usually very volatile with the index tending to move in both directions during the course of the day. Market participants expect the Union Budget 2024 should aim to balance growth-driven initiatives with a populist measures, focusing on digital infrastructure, fiscal discipline, and support for key sectors like manufacturing and agriculture to stimulate economic development,” said Rahul Ghose, CEO of Hedged.in.
However, the stock market can respond adversely to unforeseen developments in the budget. Consequently, it is essential for investors to devise a comprehensive hedging strategy to mitigate the impact of such events.
Ghose advises a low risk strategy in the Bank Nifty index that can be employed to play the budget day. He believes this becomes important for traders and investors to plan a fully hedged strategy to weather any untoward surprises in the budget.
Speaking on the Budget trading strategy for Bank Nifty options, Ghose recommends Cross Calendar Spread. A calendar spread is an options strategy that involves simultaneously entering long and short positions on the same underlying asset but with different delivery dates.
As per the Cross Calendar Spread for Bank Nifty, traders can buy Bank Nifty Put option with a longer expiry and simultaneously sell a Bank Nifty Put option with a shorter expiry date.
Here’s the budget trading strategy for Bank Nifty by Rahul Ghose:
Trade name:
Bank Nifty Cross Calendar spread
Trade Structure:
- Buy 51000PE August 28th expiry
- Sell 50500PE July 31st expiry
Trade rules:
The capital required in the trade is approximately ₹20,000. According to Ghose, this trade can be entered if Bank Nifty is between 52,500 and 51,500 on or before the budget day.
The maximum loss in the trade is ₹3,000 and the target in the trade should be 4-5% on the capital depending upon the time and individual risk appetite, he said.
Trade Modifications:
The trade is protected with a limited risk, but one can further bring down the risk by constantly selling weekly expiry puts of subsequent weeks.
For example: At the end of July, one can buy back the 31st July PE and sell the 7th August or week after that PE. Just make sure that you get at least ₹80 when you are selling the Puts, Ghose added.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
First Published:
23 Jul 2024, 08:55 AM IST
FAQs
Top Trading Strategies for Bank Nifty Options
- Buy and Sell Trades. This two-part technique uses trade orders for both buying and selling. ...
- Candlestick Chart for 5 minutes. ...
- Bull Call Spread. ...
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- Stay Updated On Market And Economic Trends.
How to do Bank Nifty Intraday Option Trading
- Keep Yourself Updated About Market Trends and Economic Events. ...
- Utilize Technical Analysis. ...
- Develop Personalized Trading Plan. ...
- Set Realistic Targets. ...
- Use Option Greeks. ...
- Long Call Option Strategy. ...
- Short Call Option Strategy. ...
- Long Put Option Strategy.
Check Bank Nifty's average daily movement by tracking historical volatility, examining daily price changes, and considering derivative indicators such as option open interest, call/put ratios, and cost-of-carry movements.
What is the best time to trade in Bank Nifty? ›
The Best Time Frame for Intraday Traders
The ideal time for intraday trading, according to stock market analysts, is between 10.15 a.m. and 2.30 p.m. This is because by 10.00 a.m. to 10.15 a.m., morning stock volatility has subsided. As a result, it is the ideal opportunity to place an intraday transaction.
What is the best indicator for BankNifty options trading? ›
- Relative Strength Index (RSI)
- Bollinger Bands.
- Intraday Momentum Index (IMI)
- Money Flow Index (MFI)
- Put-Call Ratio (PCR) Indicator.
- Open Interest (OI)
- FAQs.
- The Bottom Line.
About Shyam Advisory® as Best Bank Nifty Tips Provider
Our motto is to preserve the capital of the client first and then invest the money to gain profit. We send regular updates and briefs (of advice on-call) through SMS also after the end of every call.
How to study bank Nifty movement? ›
For Bank Nifty intraday trading, traders typically analyze market trends, identify support and resistance levels, and use many technical indicators like moving averages or the Relative Strength Index (RSI) to make informed decisions.
How to find trend in bank Nifty? ›
Traders can utilize various technical indicators to determine the direction of the trend and take positions accordingly. Some commonly used indicators include: Moving Averages: Traders can use moving averages, such as the 50-day or 200-day moving average, to identify the overall trend in Bank Nifty.
Which indicator is best for Bank Nifty on Tradingview? ›
Indicators, Strategies and Libraries
- Bank Nifty Market Breadth (OsMA) ch4ter Dec 28, 2023. ...
- Bank nifty puller and Dragger. DeepakGB Updated Aug 29, 2023. ...
- AI-Bank-Nifty Tech Analysis. ...
- BankNifty Dash. ...
- BankNifty_Bullish_Intraday. ...
- BankNifty_Bearish_Intraday. ...
- BankNifty Modified McClellan Oscillator.
Traders look out assets with substantial trading volumes, which frequently indicate the strength of the trend. Moving averages, RSI, and MACD are important technical indicators for gauging momentum and determining exact entry and exit locations.
High volume indicates increased liquidity, allowing intraday traders to execute buy or sell orders quickly. Bank NIFTY, known for its credibility and performance, has high trading volume, providing ample liquidity for intraday trading.
What is the Bank Nifty no loss strategy? ›
What is a Bank Nifty No Loss Strategy? The Bank Nifty no loss strategy is designed to protect traders from incurring significant losses while participating in the Bank Nifty index. The core principle of this strategy is to use options to hedge against potential downsides.
What is the best strategy for banks? ›
A successful banking growth strategy includes: Connecting in-branch services to digital channels, including website, social media, mobile applications, customer-relationship (CRM) management tools, chatbots, etc. The adoption of a custom mobile application for your institution.
What is the bank Nifty 2pm strategy? ›
So the rules of the game is. Check Bank Nifty day high and day low at 2 PM. Buy when day high is crossed and Short when day low is crossed, exit at 3:20 PM or when stop loss is hit. Place BO order for both Buy and Sell and relax.
How to catch momentum in bank Nifty? ›
Traders look out assets with substantial trading volumes, which frequently indicate the strength of the trend. Moving averages, RSI, and MACD are important technical indicators for gauging momentum and determining exact entry and exit locations.
