The long-term outlook remains positive for the stock of Tata Consultancy Services (TCS) (₹4,001.40). But in the short term, we expect it to move with a downward bias. The stock finds an immediate resistance at ₹4,087 and a close above ₹4,120 will trigger a fresh rally.

On the other hand, it finds an immediate support at ₹3,970 and the next one at ₹3,800. We expect the stock to come under pressure in the short term before pursuing a rally.

Event: The company came out with a strong result on Friday, post market hours. The IT major announced a consolidated net profit of ₹12,434 crore for the fourth quarter, against ₹11,392 crore recorded a year earlier. Revenues rose3.5 per cent to reach ₹61,237 crore. The company announced an interim dividend of ₹28 per equity share.

F&O pointers: TCS April futures closed at ₹4,015.25 against the spot close of ₹4,001.40, signalling the existence of long positions. Open interests witnessed a steady build up from 2.5 lakh contracts to 10.61 lakh contracts since April 1. Option trading indicates that the stock could move in the ₹3,800-4,300 range.

Strategy: Buy 4000-put, which closed with a premium of ₹78.95. As the market lot is 175 shares, this strategy would cost ₹13,816.25, which would be the maximum loss.

Initial target can be ₹130. Stop-loss can be placed at ₹42 initially and then shift to ₹80 if the premium rises to ₹95. Stop-loss can be suitably adjusted according to individual risk-taking ability from then.

Follow-up: Hold the trade on AU Small Finance Bank.

(Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading)

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