The Hindu Business Line : Outlook may turn positive for HDFC Bank, M&M

HDFC Bank: The stock closed at Rs 562 in the spot market. The outlook may turn positive if the stock trades above Rs 573. In the event, the stock may move to Rs 590.

Buy February futures after the stock moves above Rs 573 in the spot market. Initiate the position with spot-market-stop-loss at Rs 559. Note that the initial protective stop is far away from the trigger-buy price. Traders can alternatively place a stop-loss at the day's low at the time the position is initiated. Thereafter, the position has to be traded with trailing stops. Otherwise, the downside risk will be high, as the contract-multiplier is 800 units. The margin on the futures position is approximately 17 per cent of the contract value. No alternative strategies are available, as options on the stock are not actively traded.

M&M: The stock has fallen sharply in the last few trading sessions accompanied by high volumes, indicating some kind of selling exhaustion. This behaviour could trigger a temporary swing to the upside. Note that this swing to the upside may be only a counter-move because the primary trend is still not positive.

Buy February futures after the stock moves above Rs 542 in the spot market. The upside price target is Rs 556. Initiate the position with spot-market-stop-loss at Rs 538. The position has to be traded with trailing stops to control the downside risk. The margin on the futures position is approximately 16 per cent of the contract value. The minimum order size is 625 units. This recommendation is valid for only 2 trading sessions from the date of initiation. If profits are not taken or the position is not stopped, the contracts have to be closed at the end of the third day. Option-based strategies will not be optimal because the price target is not far away from the recommended trigger-buy price. This provides limited room for the option delta to generate attractive payoffs.

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

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Franklin flexi cap fund mops up Rs 1,950 cr

`Govt did not gain from UTI bailout'

Balaji Tele shares end lower on stake sale by Star TV arm

Marginal loss

Shaw Wallace in high spirits

GKW up on revival plan hopes

Hindalco hits FII buy limit

Outlook may turn positive for HDFC Bank, M&M

Consumer durables, capital goods gain

Govt plans to trim holding in all public sector banks to 51% — Spate of equity offerings on cards

Allahabad Bank files draft with SEBI