The long-term outlook remains positive for the stock of IDFC First Bank (₹84.3) as long as the stock remains above ₹66. Immediate support is at ₹77.5 and at ₹71.70.
On the other hand, the stock finds an immediate resistance at ₹90.5. A close above the latter will trigger a fresh rally that can take the stock to new heights. We expect the stock to move in a narrow range with a positive bias in the next few days.
F&O pointers: November futures and December futures of IDFC First Bank closed at ₹84.55 and ₹84.05 respectively as against spot price of ₹84.30. This signals the unwinding of long positions. However, rollover to December series stood high at 40 per cent. Option trading indicates the stock could move in the ₹80-100 range.
Strategy: Consider buying December 85-call on IDFC First Bank. The option closed with a premium of ₹2.25. As the market lot is 7,500 shares, this strategy will cost ₹16,875.
- Also read: Taking the shock out of the system
The maximum loss would be the premium paid (₹16,875). That would happen if the stock fails to cross ₹85 before December expiry. But the profit potentials are high if IDFC First Bank surges sharply before December expiry. The upmove can be slow on this stock.
Hold the call option for at least two weeks and can be reviewed later. However, traders can exit if the premium value hits ₹20,000 before that.
Follow-up: Hold NTPC futures as advised last week, as the stock moved on expected lines.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading