The Hindu Business Line : Outlook may turn positive for BPCL

BPCL: The stock closed at Rs 387 in the spot market. The outlook may turn positive if the stock trades above Rs 397. In the event, the stock could move to Rs 430.

Buy February futures after the stock moves above Rs 397 in the spot market. Initiate the position with spot-market-stop-loss at Rs 390. The position has to be traded with trailing stops to control the downside risk. The margin on the futures position is approximately 18 per cent of the contract value. The minimum order size is 550 units.

Short-term traders can buy February futures after the stock moves above Rs 387. The upside price target would then be Rs 397. The initial protective stop should be placed at Rs 382 (spot price). Note that this short-term recommendation will be valid for only 3 trading sessions from the date of initiation. If profits are not taken or the position is not stopped, the contract has to be closed at the end of this period.

Traders setting up positions for a target price of Rs 430 can look to constructing call spreads as alternative strategy. This position can be initiated with long February 400 calls and short February 430 calls. The position can be set up for a net debit of 7-8 points. The spread will payoff 7-8 points if the stock moves to the upside price target within 5-7 trading sessions.

Canara Bank: Short-term traders can buy February futures after the stock trades above Rs 193 in the spot market. The position has to be initiated with trailing stops. Otherwise, the downside risk will be high, as the contract-multiplier is 1,600 units. The margin on the futures position is approximately 26 per cent of the contract value. This strategy is valid for only three trading sessions. If profits are not taken or the position is not stopped, the contract has to be closed at the end of this period.

Traders can also initiate a position for a longer horizon. The long futures position has to be initiated after the stock moves above Rs 206 in the spot market. The upside price target would then be Rs 216. The position has to be set up with an initial protective stop (spot price) of Rs 198. Option-based strategies are not optimal because the price target is not far away from the recommended entry level.

(The opinion expressed in this column is based on technical analysis. There is risk of loss in trading.)

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