F&O Query: Should you hold IDFC Limited futures?

I bought May expiry IDFC Limited futures for ₹90.40. Should I hold or exit? Also, I’ve bought shares of Wipro at ₹334. Should I hold it for the long-term? – Govind Mundada

The stock of IDFC Limited rallied in April and produced a monthly gain of nearly 12 per cent. However, since the beginning of May, it has largely been consolidating – it is oscillating within the range of ₹89-93. Consequently, the May futures contract of IDFC Limited too has been stuck in the ₹89-93 range. Nevertheless, the bias is bullish since the stock rallied just before entering the consolidation phase.

That said, technically, either of these level should be breached to confirm the next leg of trend. If the IDFC futures break out of ₹93, it can see a swift rally to ₹100. Since ₹100 is a psychological level, the contract might start charting a sideways trend again after appreciating to this level.

Also read: F&O Tracker: Derivatives participants bullish on indices

On the other hand, if IDFC futures fall below ₹89, it could see a correction, probably towards ₹85, a support level. Subsequent support is at ₹80.

Considering the above factors, we suggest two alternatives to you. One, hold IDFC futures but keep a stop-loss just below the support at ₹89. Our suggestion would be to keep stop-loss at ₹87. Book profits when the price hits ₹100. Two, you can exit the trade now, wait for the stock to come out of the ₹89-93 range and then initiate positions along the direction of the break.

With respect to your holdings on Wipro, you can refer to our long-term view on the stock here.

Send your queries to derivatives@thehindu.co.in

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