The stock of Hindalco Industries (₹429.5) is ruling at a crucial level. The stock finds an immediate support at ₹391, which is crucial for short-term players as a close below will change the outlook negative. On the other hand, it finds an immediate resistance at ₹462 and the major one at ₹510. A close above the latter will change the long-term outlook positive. We expect the stock to travel in its long-term bullish path.
F&O pointers: Hindalco March futures closed at ₹433.50 and February futures at ₹430.85 against the spot price of ₹429.50. A rollover of 14 per cent to March series at the end of the penultimate week is quite healthy and premium of March contracts indicates long rollovers. Option trading in the March series indicates that the stock could move in ₹400-500 range.
Strategy: Consider a bull-call calendar spread on the stock. This can be initiated by selling 440-strike call of February series and simultaneously buying the same strike of March series. These options closed with a premium of ₹1.95 and ₹14.70 respectively.
The cost of trade will be ₹17,850, which would be the maximum loss. This will happen if the stock closes below ₹440 on expiry (March series). The break-even point is ₹453.65.
We advise traders to exit the position if the combined premium slips to ₹6 or rises to ₹23, while entry point could be ₹10-12.50.
Follow-up: Book profit in IRCTC. Traders could exit from NTPC (bull-call spread recommended the previous week) with marginal profits.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading