The stock of Infosys rules at a crucial level. If the stock manages to cross ₹1,783, then even the long-term outlook will turn positive. The stock finds an immediate support at ₹1,543 and resistance at ₹1,678. In the short term, Infosys may move in a narrow range with a positive bias. We expect the stock to breach the near-term resistance, and it may even touch ₹1,783.
F&O pointers: The Infosys November futures witnessed a healthy rollover of 29 per cent to December series on the last day of the penultimate week. The Infosys December futures at ₹1,606.40 also commands a healthy premium over the spot price ₹1,593.40, signalling long rollovers. Options trading indicates that Infosys could move in a ₹1,500-1,700 range.
Strategy: Traders could consider a calendar bull-call spread on Infosys, which can be done by selling 1,600-call of current month and simultaneously buying the same strike call of December series. These options closed with a premium of ₹11.15 and ₹47.60 respectively. As the market lot is 300, this strategy will cost ₹10,935 (or ₹36.45), which will be the maximum loss one can suffer and that can happen if Infosys closes below ₹1,600 during the expiry of December series.
However, profit potentials are high, if Infosys falls marginally or stays at current level in the next four days and rises sharply from next week. A close above ₹1,636.45 will turn the position profitable. We advise traders to hold the position for at least two weeks. Trades can be entered at the combined premium of ₹30-40. Exit the position, if premium falls to ₹10 and aim for a target of ₹95. Traders can use stop-loss deftly to protect their profits.
Follow-up: Recommendations HAL is in the money. We advise traders to book profit. However, IRCTC, recommended during the previous week, might have hit stop-loss.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.