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I have bought 1 lot of Ashok Leyland February futures at ₹190. Should I continue to hold it or exit? – Bhanu Kaleshwari
Ashok Leyland (₹171): Hold the futures long for now. But have a stop-loss at ₹167. Here’s an analysis of the stock.
Ashok Leyland’s share price has declined since the beginning of the current year. It fell off the resistance band between ₹188 and ₹190. It is currently hovering around ₹171.
Consequently, the February futures of the stock fell off ₹190 and is now trading near ₹172.
We advised you to hold the futures long because the underlying stock has support at ₹170. Moreover, the 200-day moving average lies at ₹169, giving some hope for the bulls.
The respective support for February futures is the same price band of ₹169-170.
That said, support does not guarantee a rally. If the contract breaches the support at ₹170, it will open the door for further fall.
The nearest potential support below ₹170 for February futures is at ₹165. Subsequent support is at ₹160. Hence, you should protect the trade from this by placing a stop-loss at ₹167.
In case the futures contract bounces off the support band of ₹169-170, it can face resistance at ₹178, where the 20-day moving average lies now. The probability of a recovery beyond this level is less likely.
Hence, you can liquidate the longs at ₹178. Consider buying futures again if it breaks out of ₹178; place stop-loss at ₹175. This position can be exited at ₹188.
Send your queries to derivatives@thehindu.co.in
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