The outlook remains weak for the stock of Tech Mahindra (₹1,119). The immediate resistance is at ₹1,185 and the next one at ₹1,273. On the other hand, a conclusive close below ₹1,116 can weaken the stock towards ₹1,082 and even to ₹1,028. It appears that the stock is likely to see downward pressure in the short term.
F&O pointers: Tech Mahindra futures, at 89 per cent, saw less rollover to March series as against three-month average of 93 per cent. Yet, the futures price of ₹1,124.05 against the spot price of ₹1,119 indicates a healthy premium and signals existence of long positions. Option trading indicates that the stock finds strong resistance at ₹1,200 and support at ₹1,100 and ₹1,000.
Strategy: Consider buying a 1,120-put on Tech Mahindra. It closed with a premium of ₹30.30 and as the market lot is 600 shares, this would cost traders ₹18,180 – the maximum loss one can suffer. This will happen if the stock holds above ₹1,120 on expiry. The break-even point is ₹1,089.70.
If the stock opens on a strong note, traders can stay away from this strategy.
Consider entering the position if the premium rules between ₹28 and ₹32 and exit if the premium rises to ₹45-50 or dips to ₹18-20.
Follow-up: Hindalco moved on expected lines in the first four days, but the sharp decline on Friday erased all confidence. Exit the position with a minimal loss.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading