The Short Only Strategy now begins its virtual life. The first trade is pretty simple.
Short ICICI Bank
So I’ve decided the Banking sector is weak going forward. The best way to cash in is to short the extended banks – the weakest of the pack. While on a 3 month relative strength basis, Axisbank is weak, ICICI is the weakest among the biggies in a 6 month scenario. Fundamentally too, there are issues:
So I will go “virtually” short on ICICI. At Rs. 674 on the future today, with a lot size of 175, I would put 10% of a virtual portfolio on this short. Since I’m running 50L, I will put 5L on this. Forget margins and all – I am going totally unlevered on the fund.
That means 4 contracts (700 shares) of ICICI short at 674.
Will note and mark to market every week in a google doc. If you are interested the margin demanded by the broker is going to be about Rs. 2.5L., but I allocate the full 5L on it.
I know, still have to work on the presentation of this, but it should be done over the weekend.