Kindly guide on natural gas call as it was provided on May expiry (₹194) while June price was at huge premium (at around ₹210) on May 24. Now that all premium is gone, should I initiate a buy position?

Dipak Lakhani

When the natural gas futures was trading at around ₹194 on May 24, we had recommended initiating long positions if the price falls to ₹180. In the subsequent sessions, the contract fell and it is now hovering around ₹180.

Therefore, you can consider going long on natural gas futures contract now. Initial stop-loss can be placed at ₹168. When the contract rallies past ₹200, alter the stop-loss to ₹190. Further, when the contract touches ₹205, tighten the stop-loss to ₹195. Liquidate the longs at ₹212. Note that the target is revised down from ₹215 to ₹212, adjusting for the recent price action in the June contract.

Also read: F&O Tracker: Nifty futures witness short covering and long build-up seen in Bank Nifty futures

I have a position on GAIL futures contract at ₹109. Kindly advise.

Abhiram Pendharkar 

It would help if you mention whether you have a long or short position.

GAIL (India) futures (₹105.45): The price of GAIL futures contract has been on a fall over the past few days. However, broadly, the underlying stock seems to be stuck in the range of ₹104-112 since March. That means, the stock, and consequently its futures, is trading near the support. Specifically, the futures has a support band between ₹104 and ₹105. So, assuming that you have long futures, we advise you to hold the position. But keep a stop-loss a little below the support at ₹104, say at ₹103.

However, as things stand, the likelihood of closing this trade with a profit looks less likely. Because, the contract has a stiff resistance at ₹109. So, we suggest exiting the longs when the price recovers to ₹109. You may consider fresh buys, if GAIL futures break out of the resistance at ₹109. In such a case, keep stop-loss at ₹107 and look for a target of ₹114.

In case you are holding a short position taken at ₹109, we suggest booking profits now at around ₹105 for the same reason that the ₹104-105 price region is a support band against which the GAIL futures could see a rebound in price.

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