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The stock of IRCTC (₹758.50) is ruling at a crucial level. Immediate resistance is at ₹782 and a major one at ₹835. A close above the latter will alter the medium-term outlook too positive. On the other hand, the nearest supports are at ₹738 and ₹664. A close below the latter will change the short-term outlook negative. We expect the stock to sustain the recent gains.
F&O pointers: The counter witnessed unwinding of open positions on Friday despite the stock surging which indicates that traders preferred to book profits rather than rolling over the positions. However, IRCTC November futures at ₹759.70 versus the spot price of ₹758.50, signals the existence of long positions.
Strategy: Consider a bull-call spread on the stock by selling 800-call and simultaneously buying the 750-call. As these strikes closed with a premium of ₹13.85 and ₹32.95 respectively, this will cost traders ₹16,712.50 (market lot 875). The maximum loss would be the net premium paid, which will happen if IRCTC fails to move past 750 on expiry.
On the other hand, a profit of ₹27,037.50 is possible if the underlying IRCTC moves past ₹800. The break-even price is ₹769.10.
We advise traders to enter the position if the combined premium rules between ₹19 and ₹23. Traders can keep a stop-loss at ₹27.
Follow-up: ONGC moved on expected lines. We advise traders to hold the position by shifting the stop-loss to protect profits.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.
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