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I have bought 4 lots of Hindustan Petroleum January 25 futures at ₹403. Shall I hold it or sell it?
Santhosh Reddy
HPCL (₹450.80): Hindustan Petroleum Corporation Ltd (HPCL) and its futures has been steadily gaining since November last year. The support at ₹250 aided the rebound in prices. Towards the end of 2023, HPCL futures confirmed a bull flag breakout. According to this chart pattern, the price is likely to touch ₹480 in the near term. Also, there are no signs of a bearish reversal on the chart.
Considering the above, you can hold the longs. Depending on your risk appetite, you can choose from the following alternatives as the future course of action. One, retain all four lots that you hold, and have a dynamic stop-loss. We suggest placing stop-loss at a price that is ₹20 lower from the current market price. So, once the market opens, place stop-loss at ₹430 as HPCL futures closed at ₹451.20 on Friday. As and when the price rallies, raise the stop-loss at an interval of ₹20. But do not adjust when the price falls.
Two, exit two lots at the current level. For the remaining two lots, place a dynamic stop-loss as mentioned above.
I have a short position in Godrej Consumer Products January futures initiated at ₹1,179. Should I hold or exit?
Palani Shanmugam
Godrej Consumer Products (₹1,155.50): The stock has seen a drop in price over the past few sessions. Consequently, Godrej CP futures, after marking a high of ₹1,234 on January 5, has now declined to ₹1,157.20. However, the overall trend remains bullish, and the price drop is likely to be a corrective dip. So, the downside could be limited.
Godrej CP has its nearest support at ₹1,130 – its 20-day moving average. We might see the downswing to extend to ₹1,130 and then a recovery could follow. On the other hand, if the stock moves above ₹1,175 from here, it can be taken as an indication of the resumption in uptrend post a correction.
Therefore, we suggest holding the short position but with a stop-loss. We recommend you to place a stop-loss at ₹1,180. If the contract slips below ₹1,140, tighten the stop-loss to ₹1,160. Book profits at ₹1,130.
Send your queries to derivatives@thehindu.co.in
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