Reliance Capital rules at crucial level

K. S. Badri Narayanan | Updated on February 27, 2011

I had shorted ACC March futures at Rs 965 last week, as it was Rs 25 less than Feb futures. Why is March futures trading lower? What does it mean? Is it better to hold my short position or cover?P. Subramanian

ACC (Rs 961): The stock is ruling at a crucial level. It finds an immediate support at Rs 985 and the crucial one at Rs 965-970, a conclusive close below could drag it to Rs 858-860. Key resistances are Rs 1,042 and Rs 1,075.

F&O pointers: Farther month (March here) futures quoting below the current (Feb) series indicates rollover of short positions. Most long positions were allowed to expire in (Feb series). This implies that traders have negative view on ACC. However, short covering could result in a big surge of the stock price. Even the April futures is quoting below March futures price. Some time later discount will be due to some corporate announcements like M&A or special dividend. The rollover to March series was about 73 per cent.

Strategy: If you are willing to take a risk, keep the stop loss at Rs 985 and hold. If the ACC opens on weak note, shift the stop loss to your entry level.

I purchased Nagarjuna Fertilizers 35 call at Rs 0.35 on Feb 24. What are the near-term prospects?Johny P.V.

Nagarjuna Fert (Rs 27): The stock is likely to move sideways with negative bias. Nagarjuna finds key supports at Rs 25 and a conclusive close below that could weaken it to Rs 22. The immediate resistance appears at Rs 31.3

F&O pointers: Accumulation of open position seemed to be on the short side.

Strategy: Exit, as your position will turn in-the-money, only on closing above Rs 35.

I am holding a short position in Reliance Capital futures at Rs 455.5. Please advice. - Rajagopalan Vijay

Reliance Capital (Rs 456): The stock rules at crucial level. It finds key support at Rs 435. If Reliance Capital is able to hold above that level, it can reach Rs 496 and Rs 543. A dip below the crucial support could weaken it to Rs 369.

F&O pointers: The counter witnessed unwinding of long positions on Friday. Option trading also indicates a negative bias.

Strategy: If you are willing to take a risk hold your position with a tight stop loss at Rs 461 (spot price on a closing day basis). Otherwise exit.

I have bought Tata Motors and DLF March futures at Rs 1,146 and Rs 214. Both the positions incur heavy loss. Please suggest a strategy. - Geethanjaly P.

Tata Motors (1093): The outlook remains negative. It finds key resistance at Rs 1,143 and then at Rs 1,265. If it fails hold Rs 1,011, the stock could fall sharply towards Rs 848.

F&O pointers: The stock added fresh open interests. Option trading points a positive bias.

Strategy: If you are willing to take risk, hold your position with a stop loss at Rs 1,054. If it opens on positive note, shift the stop loss to your entry level.

DLF (211): The outlook remains negative. It finds crucial support at Rs 203, failing which it could go to as low as Rs 167. It finds an immediate resistance at Rs 221.

F&O pointers: It added fresh short positions in Friday's date. Option trading indicates negative bias.

Strategy: Exit.

I am holding Tata Motors short position March series at Rs 1,075. Please suggest a strategy. - Srinivasan Ganapathi

Strategy: If you are willing to take a risk, hold your position with a tight stop loss at Rs 1,143 (spot price on a closing day basis). Else exit.

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.

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Published on February 27, 2011

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