With exit polls predicting a comfortable win for the BJP-led NDA coalition, markets are likely to see heavy activity on Monday. Still, the verdict is not a given, and traders will need to position themselves for any unexpected development.
Arun Kumar Mantri, derivatives trader and Founder of Mantri Finmart shares his strategies on how to position trades on election result day, considering various scenarios: What if BJP-NDA fails to form government, wins 280-320 seats; wins 320-360 seats; If it wins more than 400 seats:
Trading Plan for Monday by Mantri:
Scenario 1: If BJP-NDA Gets 320-360 Seats
Mantri’s View: The markets are expected to react positively. If BJP secures more than 350 seats, Nifty is likely to top 23,000.
Strategy: Buy NIFTY June 06 expiry 22800 CE at Rs 300
Stop Loss: 190
Targets: 520
Total Cost: Rs 300 premium (Rs 7500 per lot)
Maximum Profit: Unlimited on the upside
Maximum Loss: Rs 7500 per lot if the option expires worthless
Scenario 2: If BJP-NDA Gets 280-320 Seats
Mantri’s View: Nifty is expected to react negatively initially but may recover if BJP achieves an absolute majority by crossing the 272 mark. A buy on dips strategy will work in this scenario.
Strategy: Buy NIFTY June 06 expiry 22700 CE on dips at Rs 250
Stop Loss: 120
Targets: 440
Total Cost: Rs 250 premium (Rs 6250 per lot)
Maximum Profit: Unlimited on the upside
Maximum Loss: Rs 6250 per lot if the option expires worthless
Scenario 3: If BJP-NDA Fails to Form Government
Mantri’s View: This could be a disaster for the bulls. The Nifty could hit 21600-21700, with no quick recovery expected.
Strategy: Sell NIFTY June Future between 22600-22700
Stop Loss: 22900
Targets: 21700
Total Cost: Rs 7500 premium (if Stop Loss is triggered)
Maximum Profit: Unlimited on the downside
Maximum Loss: Rs 7500 premium (if Stop Loss is triggered)
Scenario 4: If BJP-NDA Gets More Than 400 Seats
View: This highly unexpected scenario could lead to the biggest rally of the current calendar year, with the Nifty likely topping 23500, along with significant gains in broader markets.
Strategy: Buy NIFTY June 06 expiry 23000 CE at Rs 240-280
Stop Loss: 120
Targets: 750
Total Cost: Rs 280 premium (Rs 7000 per lot)
Maximum Profit: Unlimited on the upside
Maximum Loss: Rs 7000 per lot if the option expires worthless
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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