SBI Looks Good for Further Gains - Buy on Dip

Banking pack is looking good to go further north. Leader of the pack is surely SBI. As I had mentioned in my earlier post that SBI may reach 200. Check it out here in the last paragraph.

But it is important that you exercise some caution. It will be prudent to buy at dip. Some cooling in prices will make this fresh entry a very compelling buy.

So look for entering SBI March Futures at 184.5/185.5. This will ensure that even if market turns negative, you will certainly get a profitable exit when you enter at this conservative price.

The other stock which looks appealing to buy, from swing point of view, is Ultracemco. This stock closed at 3119 in Mar Futures and seems ready to go beyond 3150. You can consider buying Ultracemco Mar Futures at 3100 for target of 3155.

Target Achieved in SBI - Time to Assess Profit

Remember I told you last Tuesday to buy SBI Mar Futures at 184/185 in this post. In this post I had mentioned that SBI was the right candidate for swing trading.. I had given the target as 190.

Yesterday, I had revised the target to 189.5. Check it here. Frankly speaking I had revised the target down because in yesterday's trade SBI reached a high of 189.7 and then dropped like a ton of bricks to day low of 184.5, which was a bit unnerving. I did not want a repeat of what happened yesterday and hence gave a conservative revised target.

Now lets analyze as to what happened to SBI in today's trade. SBI Mar Futures opened at 186.5, made a day low of 185.7 and then went on to make day high of 191.4, finally closing at 190.8. If you had closed your position at 189.5 as recommended yesterday, you still would have made a good profit in three days.

Profit Calculation

Bought at 184.5 , Sold at 189.5
Lot size : 2000 shares
Profit =  (189.5 - 184.5 = 5) X 2000 = Rs 10000/-

This profit has been achieved in three trading sessions with capital investment of Rs 80000/-. Hence Return on Investment (ROI) is 12.5% in 3 days. This the power of swing trading.

SBI Erazes Day's Gain - Are We Still Good to Reach Target?

What a dramatic last hour of trade it was? Everything that was achieved through the day's trade was just washed away in the final leg. The swing that SBI was enjoying for the last two days was blown away.

Though SBI closed flat compared to last trading session, it is with a heavy heart that I have to announce that the dream of seeing today's close near 190 has vanished. If not for the last hour of trade, SBI would have closed near 190.

Why I am so insistent on 190 - you may well ask. Because a close near 190 would have ensured that the swing strengthens. This in turn would have signaled that the target gets extended to 200+. I had already mentioned it in my last post.

Well all is not lost. But now we need to be careful though. Exit your trade at 189.4 if tomorrow's opening is not strong. But in case you are lucky to get a gap up opening near 190 then wait for the extended target of 200 to book profit

Swing in Place for SBI -Target in Sight

Those who bought SBI Mar Future at my recommended buy price of 184/185, would be sitting pretty. Yesterday I had given this call in my last blog post.

If you had bought just one lot of SBI Mar Future at 184.5 (average of the buy range given), you would be happy with the closing price. In today's trade SBI Mar Future closed at 185.9 and thankfully near its day- high. Since there are 2000 shares in one lot, you are presently sitting on an unrealized profit of 2000 X (!85.9-184.5) = Rs 2800/-

For this call I had given a target of 190. Let us see what happens tomorrow. Lot depends on what happens to Fed rate decision which will be taken at US Federal Reserve meet tonight.

Read very carefully what I have to say now. Following scenarios may develop tomorrow in trade :-

• If SBI opens with a gap up, then target of 190 will be achieved swiftly.
• If SBI opens flat, then price may either go up to 190 with great effort, or it may go down to 182 with equal difficulty.
• If SBI opens with a gap down, then you may find price tumbling to 178.

Whatever be the scenario, target of 190 is very likely to be achieved. However if tomorrow SBI Mar Future closes near 190, then you may like to hold this position for an extended target of 200.

Take the Swing this Wednesday - Find the Most Eligible Candidate

Short term trading through the instrument of stock futures can be most rewarding and tension free if you can identify and trade the swing in prices. Swing trading can even allow you the liberty of trading without stop loss - provided you identify and join the swing at the appropriate time.

This Wednesday you can trade the swing in Bank Nifty. And the most eligible candidate in the banking counter is State Bank of India.

If you are going to trade March contract of SBI in NSE, then my suggestion is to buy in the range of 184/185 for a target of 190. SBI closed at 185.8 in yesterday's trade.

There is a caveat though. This trade in SBI Mar Futures needs to be initiated if Nifty opens flat or slightly positive. But in case Nifty opens deep in the red, then buy SBI Mar Future in the range of 181/182, target remaining the same.

Enjoy the swing!!!