The stock of Maruti Suzuki is ruling at a crucial level. The stock finds an immediate support at ₹6,311 and the crucial one at ₹6,247. A close below the latter will change the medium term outlook to negative for Maruti Suzuki, which can drive it down to ₹5,888. The stock finds immediate resistance at ₹6,510 and only a close above ₹6,840 will reconfirm the long-term bullish trend. In that case, Maruti can reach ₹7,740. We expect the stock to be more volatile.
F&O pointers: Maruti Suzuki May futures on Friday closed at ₹6,486.90 as against the spot price of ₹6,455.65, a premium of ₹30. The counter too witnessed a steady accumulation of open positions in the last few days. Option trading indicates a range of ₹6,000-7,000 for Maruti Suzuki.
Alternatively, conservative traders could also consider a bull-call spread on Maruti Suzuki by buying 6,400-call and simultaneously selling the 6,500-call, which closed with premium of ₹272.30 and ₹222.65 respectively. As the market lot is 100 shares per contract, this strategy will cost traders ₹4,965 which will be the maximum loss. This will happen if the stock ends at or below ₹6,400. A profit of ₹5,035 is also possible if Maruti closes at or above ₹6,500. We advise traders to hold the option strategy till expiry.
Follow-up: We had advised a long futures call on SBI Life Insurance; profit target of ₹942 was hit. We had also advised a calendar spread on SBI Life. Traders can continue to hold May month 950-call.