The Hindu Business Line : Stock Strategy: NTPC, IDFC may cool off

NTPC (210.6): NTPC withstood this week’s sell-off. We feel the stock could take a dip if it fails to sustain the 208-210 level. In that event the stock faces next support at 195 and the next at 175. On the other hand, a move above 214 (on a closing day basis) can lift the stock to 263-265 levels, though in between 225 would pose a strong resistance.

F&O pointers

NTPC futures (market lot 1,625) saw a rollover of 86 per cent, much higher than what was reported in the last three months. With the futures price quoting at a discount, it seems most of the accumulations may have been on the short side. NTPC futures closed at 210.6 against the spot close of 211.5. Interestingly, even at the start of the new series on Friday, NTPC futures shed 3.6 lakh shares in open interest, indicating the lack of confidence among traders. Accumulation on the call side was quite high indicating the emergence of call writers. Consider going short on NTPC November futures keeping the stop-loss at 215. Adjust the stop-loss progressively and book profits at the first target of 195. Traders with a high-risk appetite can keep the stop-loss at 225.

IDFC (146.85): The outlook for IDFC appears negative as long as it stays below 155. The stock finds an initial support at 125-130 and then at 102. A move above 155 could lift the stock to 175.

IDFC futures also saw a sharp drop in open interest on Friday and ended at a discount to the spot. Rollover of open positions dipped marginally compared with the last three months. Call options witnessed higher accumulation suggesting limited upside. Puts were not active on IDFC.

Consider going short on IDFC November futures keeping the stop-loss at 155.

Follow up

Last week’s strategies of shorting Tata Steel and Gail India would have generated windfall profits.

Feedback or queries (on positions) may be sent to f& o@thehindu.co.in. Replies will be published in the Monday edition.

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