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The stock of ITC (₹359.70) is ruling at a crucial level. A conclusive close above ₹360 will change the long-term outlook positive for ITC. In such an event, the stock could touch ₹401 initially and then record highs above ₹409 that it had registered in February 2015. The stock has the potential to reach ₹495, if it closes above ₹409. On the other hand, ITC finds immediate support at ₹323 and a close below this will change the short-term outlook negative for the stock. The stock could then find support at ₹290.
F&O pointer: ITC June futures closed at ₹354, at a discount to the spot price of ₹359.7. That is because the stock is turning ex-dividend (₹8.50) by May 30. Trading in options indicates that the stock may face support at ₹330.
Strategy: Traders can consider going long on ITC futures with a stop loss at ₹323. Stop-loss can be shifted to ₹360, once the contract manages to close above that level. The initial target could be ₹370 for short-term traders. Traders with long-term perspective could even consider rolling over the contracts for targets of ₹401 and ₹425 .
Risk-averse traders can consider buying 360-call that closed with a premium of ₹6.75. This will cost investors ₹10,800, which could be the maximum loss one can suffer. Traders can consider exiting if the option premium dips to ₹4,500 or rises to ₹18,000.
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