While the medium-term outlook remains negative for AU Small Finance Bank (₹1,209.85), the immediate outlook for the stock appears positive. AU Small Finance Bank finds an immediate resistance at ₹1,271 and ₹1,351. A close above ₹1,351 will change the medium-term outlook to positive. If the stock manages to break the latter level, it has the potential to breach ₹1,500-mark. On the other hand, the immediate support is at ₹1,133 and the subsequent one at ₹1,080. A close below the latter level, will trigger a fresh downslide that can take AU Small Finance Bank towards ₹973.
F&O pointers: AU Small Finance Bank November futures, which saw a steady accumulation of open positions in the last few weeks, shed 3.5 lakh shares in open position on Friday along with fall in share price. The counter has been moving the ₹1,150-1,300 range for quite some time. Option trading indicates that the stock could move in a range of ₹1,200-1,300. Volume is lower in AU Small Finance Bank as the counter was introduced in F&O only in March.
Strategy: Traders could consider a bull-call spread on AU Small Finance Bank. This can be constructed by selling ₹1300-strike call and simultaneously buying the ₹1240-strike call. These options closed with a premium of ₹34.60 and ₹54.40 respectively.
As the market lot is 500 shares, this will cost traders ₹9,900, which will be the maximum loss one can suffer. That will happen if the stock fails to move above ₹1,240. However, a profit of ₹20,100 is possible if the stock moves above ₹1,300. A close above ₹1,259.80 will make the position break-even. Hold the position till expiry or at profit whichever occurs first.
Follow-up: Hold HAL position and can be reviewed next week.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.
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