The news was out again during the market hours. The benchmark index was reeling under pressure from the negative European cues and the sectoral leaders were the candidates of profit booking. The steel sector was the under performer as most of the counters were trading near the strong resistance points.
“EGoM is going to meet on 25 June, Friday to decide on deregulation of the petrol and diesel prices”. From the last two times we were anticipating for the announcement to be made but Govt. was in no mood of hurry.
In stock markets “history repeats itself” and this could be applied fairly in the case of government policy announcements. It is never a smooth business and so taking positional calls on a particular event or announcement is not advisable.
Before the announcement was to be made by the EGoM (Empowered Group of Ministers) in the first meeting which was deferred due to absence of quorum, we advised to take positions in both Calls and Puts with appropriate Strike prices. The outcome of the meeting was “another meeting”. The Oil companies stocks were pounded heavily. If you think that you would have come out of the long positions then I believe that probability of that happening is minimal from a retail investor perspective.
We reiterate our position to take hedged positions just before the announcement in the state run oil companies which were the performer of today’s session. A positive bias is advisable but a position in hope of the policy announcement being favorable would not serve the purpose to the large number of events and policy announcements which are factored by the markets every day.
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Akash Singh, Technical Analyst [Akash@hbjcapital.com], HBJ Capital Services Pvt Ltd
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