The long-term outlook for Oil and Natural Gas Corporation (Rs 128.3) remains negative. However, in the short-term, it may remain positive. The stock has major support at Rs 117 and a close below that level alone can change the short-term outlook to negative. On the other hand, it finds an immediate resistance at Rs 132 and a major one at Rs 144. A close above the latter could also change the medium-term outlook to positive. Only a close above Rs 180 would change the long-term outlook to positive for ONGC.

Having breached several resistance levels, ONGC may move sideways, before charting a rally.

F&O pointers: The ONGC January futures at Rs 127.80 rules at a discount to the spot price, indicating the existence of short positions. Options trading indicates a range of Rs 125-130 for the scrip.

Strategy: Traders could consider going long on ONGC futures, with an initial stop-loss at Rs 117. If the contract opens at Rs 127 on Monday and sustains above that level in the first half, then shift the stop-loss to Rs 125 and trail it with the rally. Traders could aim for a target of Rs 132 and Rs 144.

Traders should remember that this strategy will involve higher margin commitments and could result in heavy loss. So, it is only for traders who can withstand high swings and have deep pockets to meet margin commitments.

Alternatively, traders could consider buying Rs 127.50-call, that closed with a premium of Rs 4.10. As the market lot is 4100, this would cost traders Rs 17,015. Exit the position if the option premium rises to Rs 7 or falls to Rs 1.80.

Follow-up : Hold ITC positions.

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