The long-term outlook remains positive for the stock of Tata Communications (₹1,374.35) though in the short-term, it faces some headwinds. The immediate support appears at ₹1,295 and the next one at ₹1,196. A close below the latter will alter the long-term positive outlook. On the other hand, the stock finds immediate resistance at ₹1,480 and a close above has the potential to trigger a fresh rally.

F&O pointers: The rollover of open positions is nearly 17 per cent as traders seemed to have squared off their long position. The premium of futures has also narrowed down. This signals that traders cut their loss when the Tata Communications slipped sharply on Friday. Compared to other contracts, options on this stock are not that active.

Strategy: Traders can consider a calendar bull call-spread on Tata Communications by selling the current month ₹1400-strike call and simultaneously buying the same strike call of February month. These options closed with a premium of ₹15.95 and ₹56.45 respectively. As the market lot is 400 shares, the outflow will be ₹16,200, which will be the maximum loss. This will happen if Tata Communications fails to move past ₹1,400. On the other hand, profit potential is large if the stock slips in the next four days and then rises sharply.

We advise traders to exit the position if the loss mounts to ₹10,500. Traders should remember that the stock will be volatile ahead of the Budget on February 1. So, this strategy is for traders who can understand the risk involved and can withstand wild price swings.

Follow-up: Recommendations on IRCTC and ITC would have triggered stop losses. However, those who hold IRCTC (Feb call) can hold till the Budget is presented.

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

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