The stock of HDFC Asset Management Company (₹2,135.4) is ruling at a crucial level. The stock finds an immediate resistance ₹2,240 and a close above ₹2,715 can lift the stock towards ₹3,065. A close above the latter will change the long-term outlook positive for the stock. On the other hand, immediate support appears at ₹2,073 and a close below that will drag stock towards ₹1,860. It appears the stock may resume its upward journey.
F&O pointers: Even as HDFC AMC January futures slipped from ₹2,290 to ₹2,140 last month, open interest positions saw a steady accumulation from 0.74 lakh to 17.53 lakh contracts. Option trading indicates that the stock could move in ₹2,100-2,300 range. Options are not that active, especially on the put side.
Strategy: Traders could consider buying 2200-call, which closed with a premium of ₹32.75. As the market lot is 300 shares per lot, this would cost traders ₹9,825. The maximum loss will be the premium paid (₹9,825), and that will happen if the stock fails to cross ₹2,200. The break-even point is ₹2,232.75.
We advise traders to enter the position at ₹25-35 range for a target of ₹50-70 with an initial stop-loss at ₹15. Hold the position for at least three weeks with a trailing stop-loss. The stop-loss can be shifted to ₹25 if the premium moves past ₹35. Protect the profit on every ₹5 rise further.
Follow-up: As suggested, we advise traders to hold ICICI Bank long strangle positions, as the stock swung wildly last week.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading