The outlook for the stock of ICICI Bank (₹488.5) remains positive. As long as it stays above ₹380, the long term bullish trend will remain intact. The stock finds an immediate support at ₹462. If the current trend remains, ICICI Bank has the potential to reach ₹580.
F&O pointers: Despite the stock posting a strong gain, ICICI Bank futures shed open interest on Friday, signalling profit booking by some traders. Open interest did not see a secular accumulation, as it witnessed heightened activity last week due to Bank's result announcement. Option trading indicates a range of ₹440 and ₹500 for the stock.
Strategy: Traders could consider a bull call spread on ICICI Bank, which can be initiated by buying the ₹485-call and simultaneously selling the ₹500-call. They closed with a premium of ₹15.50 and ₹8.80 respectively. Traders have to incur an outflow if ₹9,212.50 to adopt this strategy. This would be the maximum loss one can suffer, if the stock closes at or below ₹485. A maximum profit of ₹11,412.50 (market lot: 1,375 shares per contract) is possible if ICICI Bank closes at or above ₹500. We advice traders to hold the options till expiry.
Alternatively, traders with a high-risk ability can consider going long on ICICI Bank futures with an initial stop-loss at ₹465. If the stock stays above ₹480 on the first half of Monday, then the stop-loss can be shifted to ₹480. Initial target is ₹516 while traders with deep pockets could wait till ₹538. However, remember to keep a strict trailing stop-loss
Follow up: Hold Titan positions.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.