The short-term outlook has turned slightly negative for HDFC Asset Management Company (HDFC AMC) (₹4,420.50). Another conclusive close below ₹4,425 will confirm the short-term bearishness. The immediate support appears at ₹4,385 and ₹4,180.

However, the long-term outlook appears positive if it stays above ₹3,950. We expect the stock to come under pressure in the short term.

F&O pointers: HDFC AMC witnessed a strong rollover of nearly 88 per cent, higher than the average of the last three months. The September futures closed at a healthy premium of over ₹30 at ₹4,450.55 against the spot price of ₹4,420.50. This huge premium signals higher rollover of long positions. Option trading indicates a range of ₹4,200-4,600 for HDFC AMC.

Strategy: Consider a long strangle on HDFC AMC by simultaneously buying 4,600-strike call and 4,300-strike put. These options closed with a premium of ₹66.70 and ₹56.40 respectively. As the market lot is 150 shares, this strategy would cost ₹18,465. This would be the maximum loss and that will happen if the stock is stuck between ₹4,600 and ₹4,300.

On the other hand, profit potentials are high if the stock swings sharply in either direction. On expiry, a close above ₹4,723.10 or a fall below ₹4,176.90 will turn the position profitable. Traders can exit at a profit of ₹12,500 or a loss of ₹10,000, whichever occurs first.

Follow-up: Recommendations on TVS Motor moved on expected lines. Traders can hold the September 2800-call.

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

Related Topics