Tata Motors: The immediate-term outlook remains neutral for the Tata Motors stock. Tata Motors finds an immediate resistance at ₹117 and a major one at ₹132. Only a close above ₹117 will the change the short-term outlook to positive. It finds an immediate support at ₹95.4 and a key one at ₹85.20. A close below the latter will change the outlook to negative for Tata Motors. However, we expect the stock to move in a narrow band between ₹90 and ₹130.

F&O Pointers: Tata Motors witnessed a healthy rollover of 93 per cent to the August series, which is quite normal for the counter. Tata Motors’ August futures closed at ₹104.95, on a par with the spot price of ₹104.95. Open interest too witnessed a steady build-up to 7.95 crore shares, from 19.15 lakh shares over a month. Options trading indicates a range of ₹90-120 for Tata Motors.

Strategy: We advise traders to consider selling ₹130-strike call on Tata Motors. This option closed with a premium of ₹1.40. As the market lot is 5,700 shares per contract, this strategy will ensure an inflow of ₹7,980, which will be the maximum profit one can earn. This will happen if Tata Motors fails to cross ₹130 during this month. A close above ₹131.40 will start hurting the position.

This strategy is strictly for high risk-appetite traders, as the profit is limited while loss could be heavy. So traders who have enough money to pay margin calls and withstand wild swings should only consider this strategy.

However, as long as Tata Motors stays below ₹130, there is no cause for concern. Hold the position for two weeks.

Follow-up: Hold Nifty 11,200-put option for one more week, as advised last week.

(Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.)

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