The long term outlook remains bullish for Asian Paints . We expect the stock to move in a range before taking a clear direction. The stock finds an immediate support at Rs 1,706 and resistance at Rs 1,817. Two major support levels are Rs 1,575 and Rs 1,434. A close below the latter will change the long-term outlook negative. A conclusive close above Rs 1,856 will reconfirm bullish sign and has the potential to lift the stock above Rs 2,000-mark.

F&O Pointers: As the market remains turbulent, Asian Paints March futures too shed open interest. However, futures at Rs 1,799.80 remains in premium with respect to the spot close of Rs 1,797.70. The April futures saw an accumulation of open interest and close at a good healthy premium of Rs 13 at Rs 1,810.30. This signals bullish, as traders are willing to hold on longs despite adverse market condition.  Option trading indicates a range of Rs 1,700-1,900 for the stock.

Strategy: Traders could consider a short strangle on Asian Paints using  March contracts. This can be done by selling Asian Paints 2000-March-call and 1600-March-Put. These options closed with a premium of Rs 23.40 and  Rs 10.90 respectively. As the market lot is  600 shares per contract, this would fetch an initial inflow of Rs 20,580 to traders. This could be the maximum profit one can earn from this strategy and for that to happen, Asian Paints has to remain in the Rs1,600-2,000 range at the time of expiry.

On the other hand, loss is unlimited if Asian Paints swings swiftly in any one of the directions - either up or down. So, this strategy is for traders who can withstand wild swings and have deep pockets to cough up margin money.

A close above Rs 2,034.30 or below Rs 1,565.70 will start hurting the position. We recommend traders to hold it  till expiry

Follow up: We advised a plain vanila call on Bank Nifty using April call. Though the position (28000-call)  is currently in negative, we advice traders to hold on to the position.

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