Stocks

Negative bias seen on IRB Infra

K.S. BADRI NARAYANAN | Updated on March 13, 2011

I am holding one lot of IRB Infrastructure (March series) carrying over from January 2011 bought at Rs 224. Its current market rate is around Rs 183. What is the outlook? I am willing to hold the position for three to six months. – Ravichandran M.A.

IRB Infrastructure (Rs 183.65): The outlook would turn positive only if IRB Infrastructure closes above Rs 259. The stock finds a crucial support at Rs 167 and near-term resistance at Rs 186. A close above Rs 186 could lift the stock to Rs 220 while a fall below Rs 167 has the potential to drag the stock towards Rs 142.

F &O pointers: The IRB Infrastructure futures witnessed a marginal accumulation of short positions on Friday. It closed with a premium against the spot price of Rs 182. Options are not active to discern any view.

Strategy: Consider holding your position with a stop loss at Rs 167 (spot price on a closing day basis). If the stock moves above Rs 200, shift the stop loss to Rs 186.

As recommended in stock strategy column a couple of weeks ago, I am holding short position in Jet Airways (entered at Rs 424) and also a pair strategy involving Suzlon 50 strike call at Rs 2.05 and Reliance 980 strike put at Rs 24. Please suggest a strategy.

You publish follow-up of your recommendations for only one week. What should be done if targets or stop loss levels are not achieved even after three weeks, as in the case of Jet Airways?Naresh Datta

Jet Airways: We stick to our recommendation. The long-term outlook remains negative for Jet Airways as long as it stays below Rs 673. The stock finds crucial resistance at Rs 526 and an immediate one at Rs 467. The immediate support remains at Rs 418. A close below Rs 392 could weaken the stock to Rs 334.

F&O pointers: Despite firm trend, the Jet Airways futures has been witnessing unwinding of long positions. Neither options nor next month futures is active. These indicate lack of confidence in the rally.

Strategy: As recommended, stick to the stop loss and hold positions. As far as weekly follow-up is concerned, the strategy holds good as long as the stop-loss or the target is achieved.

Pair strategy: The pair strategy is in deep out-of-the money. Hold. As mentioned in the key risk, you stands to lose the maximum if the stocks remain at current levels or moves in the opposite direction i.e. (Reliance moving up and Suzlon on the downside). If you are willing to take a risk, hold it till expiry.

I am holding two Jet Airways short positions – one entered at Rs 418 and the other at Rs 434. What is your guidance?R.P. Dalvi

Strategy: Hold your positions with strict stop loss. It is not prune for retail investors, like you, to do a cost-averaging in futures. The cost-averaging will not work most times.

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; >blfuturesoptions@gmail.com

Published on March 13, 2011

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