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I have short position on Coforge February futures initiated at ₹6,489. Should I hold or exit or average at the current level? I have also bought Dalmia Bharat February futures ₹2,109. Should I average at current price or exit?
Palani Shanmugam
Coforge (₹6,665.4): For over a week, this stock has been stuck in a sideways movement, oscillating between ₹6,470 and ₹6,720. The futures (February series) has been fluctuating between ₹6,485 and ₹6,730.
A sideways crawl means the next leg of trend depends on the direction of the break of the range. Since the broader trend is up and the underlying stock and its futures have good support, the chances for a rally are high.
However, on the back of the range-top resistance at ₹6,730, you can hold short position but with a stop-loss, which can be at ₹6,830.
That said, the trade turning profitable is low since Coforge futures has a support at ₹6,485, which is near your selling price. The 20-day moving average (DMA) too coincides at this level, making the base a strong one. So, keep a stop-loss at ₹6,830 as mentioned above and exit once the stock dips to your entry price.
Short positions can be considered only if Coforge futures slips below ₹6,450. Support below ₹6,450 are at ₹6,320 and ₹6,200.
Dalmia Bharat (₹2,084.6): The stock and its futures contract have been depreciating since the beginning of this year. But last week, a support arrested the fall. Damia Bharat February futures (₹2,090) has a considerable support between ₹2,000 and ₹2,015.
While there has been no clear indication of a bullish trend reversal, the contract is likely to see a bounce in price, potentially to the price band of ₹2,180-2,200. The 20-DMA and a falling trendline resistance also lie in this region.
The downtrend might resume after Dalmia Bharat futures rises to this barrier. That said, a decisive breakout of this resistance can turn the trend bullish. Immediate hurdle above ₹2,200 is at ₹2,300.
You can hold the futures long. But keep a stop-loss at ₹1,990. When the contract moves up to ₹2,150, tighten the stop-loss to ₹2,110. Book profits at ₹2,180.
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