The Hindu Business Line : Outlook may turn positive for HDFC, Guj Ambuja

HDFC: The stock closed at Rs 779 in the spot market. The outlook could turn positive if the stock moves above Rs 786 in the spot market. In the event, the stock could move to Rs 822.

Buy February futures after the stock moves above Rs 786 in the spot market. Initiate the position with spot-market-stop-loss at Rs 773. 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 600 units. No alternative strategies are available, as options on the stock are not actively traded.

Gujarat Ambuja: The stock closed at Rs 448 in the spot market. The outlook may turn positive if the stock moves above Rs 449.50. In the event, it could move to Rs 460.

Buy February futures after the stock moves above Rs 449.50 in the spot market. Initiate the position with spot-market-stop-loss at Rs 443. The position has to be traded with trailing stops. Otherwise, the downside risk will be high, as the contract-multiplier is 1,100 units. The margin on the futures position is approximately 16 per cent of the contract value. Option-based strategies are not optimal because the target price is not far away from the current market price. This provides limited scope for the option delta to work in favour of the position.

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

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