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The stock of Bharti Airtel (₹510.6) is ruling at a crucial level. It finds an immediate support at ₹496 and the major one at ₹467.
On the other hand, the stock finds an immediate resistance at ₹536 and a conclusive close above this level will reignite a rally that could lift it towards ₹580.
The long- and medium-term positive outlook will remain intact as long as it stays above ₹447. In the short-term, we expect Bharti Airtel to move in a narrow range with a downward bias.
F&O outlook: The December expiry Bharti Airtel futures contract closed with premium at ₹512.40, as against the spot price of ₹510.65, signalling existence of long positions.
The stock, which moved up from ₹460 level to ₹520 level, saw moderation on both price as well as open positions. This indicates traders prefer to book profits. Option trading indicates a movement in the range of ₹480-₹520.
Strategy: Traders could consider buying December expiry ₹500-strike put option. The option closed with a premium of ₹8.50. As 1,851 is the number of shares per lot, this strategy will cost investors ₹15,733.50, which would be the maximum loss one can suffer. The maximum loss will happen if Bharti Airtel closes at or above ₹500 at the time of expiry.
On the other hand, profit potentials are high, if the stock slips sharply in the current series itself. We advise traders to take profit if premium touches ₹15 or book loss if it drops to ₹4.
Follow-up: The bull-call spread on Infosys last week worked perfectly. Traders can consider booking profits.
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