📊 Price Action · Macro event
Trading based on Repo rates
Around RBI monetary policy events, banking-sector stocks and index react sharply. Position via banking-sector calls/puts pre-event; exit into the volatility crush post-decision.
Setup
- Track the RBI Monetary Policy Committee (MPC) calendar — decisions every ~2 months, usually a Friday
- Read the consensus forecast (rate hold, cut, hike) from major broker research
- Bank Nifty is the most-reactive instrument; individual PSU and private banks amplify the move
- Options IV expands 3-7 days before the decision — options premium is already pumped
Entry
Directional: buy Bank Nifty calls (if expecting dovish surprise) or puts (hawkish) 3-5 days pre-event. Straddle: buy Bank Nifty ATM straddle 2 days pre-event if you have no directional view but expect a big move.
Exit
Exit within 30-60 minutes of the announcement to capture the move but avoid the IV crush that follows. Options often halve in value within hours post-decision.
Stop-loss
For directional trades: 50% of premium paid. For straddles: manage as a combined position, exit if total value drops 30%.
When it works
- Consensus is uncertain — the biggest moves come from surprises
- Position is closed intraday post-decision — do NOT hold overnight
- Bank Nifty implied volatility is at 25-40 pre-event (elevated but not extreme)
When it fails
- Decision matches consensus perfectly — no move, but IV crushes and long options lose
- Extreme pre-event IV (60+) — you paid too much; even a big move may not recover premium
- Holding through the announcement without a stop — RBI language can whipsaw both ways
General trading rules that apply
Regardless of the specific setup, these apply to every strategy on this site:
- Never risk more than 2% of your account on a single trade
- Place a hard stop-loss before entering — no exceptions
- Journal every trade: setup, reason, outcome, one lesson
- After two consecutive losses, stop for the session
- Backtest and paper-trade for a month before deploying real capital
Every strategy here is part of our in-house catalogue, written and calibrated for Indian markets. Past behavior does not guarantee future results. Charts run against 2-year Nifty data — actual results in your account will vary. Backtest, paper-trade, and size responsibly before risking real capital.