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I have bought one lot of L&T November futures @ Rs 1,675. I have lost heavily so far. What should be my stand at this point in time? Kindly advice. – Mriganka Das

L&T Nov futures ended in a discount against the spot close and also shed open position. It finds strong resistance at 1665. As long as it stays below that, L&T has the potential to reach 1478, its first support zone, and then 1375. On other hand, a move above 1665 could lift the stock to 1735. Trading in options also suggests negative bias. While calls – 1620, 1650 and 1590 strikes – have been accumulating open positions, the 1500-put shed open interests. This indicates the emergence of call writers and nervousness of puts writers, who squared up their positions, anticipating further fall.

It is wise to cut your position immediately, as the stock has reversed its direction. If you are still holding, you can also hedge (partially) your position by selling (writing) 1620 call, which ended on Friday at 35.35. However, this involves higher margin requirements and is a risky strategy.

I have the following positions in November Futures: Canara Bank – 3 lots sold (short) @ Rs 336; and Ispat Industries – 3 lots bought @ Rs 20.50. (Actually these two were carried over from October to November and original costs were Canara Bank {short} @ 329 & Ispat Industries {long @ 24.50}). Kindly advice on near-term targets. – Asokan

Canara Bank: The Canara Bank November futures shed open position on Friday. It also ended in discount at 341.8 against the spot close of 344.7. The stock finds its immediate resistance at 360 and the support is at 315. While a move above 360 has the potential to lift the stock to 400, a fall below 315 could weaken it to a level of 265 though in between 285 might act as a minor support zone. Options provide little cue as there was no trading available in Canara Bank.

If you are willing to take a risk, you can hold your short positions with a stop loss at 360 (spot price on a closing day basis).

Ispat Industries: The stock broke the important support level of Rs 23. The stock finds immediate support at 17.75 and then at 13.8. As long it stays below 23, the stock has the potential to reach 13.8. The November futures shed 12.45 lakh shares on Friday, indicating the nervousness of traders. Besides, calls – 22.5, 20 and 25 strikes – saw heavy accumulations; Ispat Nov 17.5 put saw moderate accumulation while 15-strike also witnessed higher accumulation.

It is wise to cut your position immediately.

It is not prudent for any retail investor to take positions of three lots on any individual stock futures.

K.S. Badri Narayanan

NOTE: The analysis and opinion expressed in this column are based on F&O data available at this point of time and on technical analysis based on past price movements. There is risk of loss in trading.

Feedback may be sent to f&o@thehindu.co.in

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