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Despite its recent recovery, the immediate-term outlook remains negative for Larsen & Toubro. The stock finds immediate support at Rs 1,302 and resistance at Rs 1,353.
The next support appears at Rs 1,260 and a close below that level will change the medium-term outlook to negative. In that event, L&T could touch Rs 1,020.
Only a close above Rs 1,785 will change the long-term outlook to positive for the stock. Till such time, it will face a lot of intermittent resistances.
F&O pointers: The L&T April futures witnessed unwinding of long positions along with a fall in share price. Option trading also indicates negative bias, as lot of call writers emerged.
Strategy: Consider going short on L&T April futures with a tight stop-loss at Rs 1,353 (spot price on a closing day basis) for an initial target of Rs 1,260. Market lot of L&T is 250.
Traders can also write 1,400 call on Larsen & Toubro, which closed around Rs 25 on Wednesday. This strategy is for traders who can bear the risk, as the loss can be unlimited if L&T moves above Rs 1,400. Maximum profit occurs, if the stock closes below Rs 1,400 at the time of expiry.
HDIL (Rs 87): The long-term outlook remains negative for HDIL. It finds immediate support at Rs 78 and resistance at Rs 108. A close below Rs 85 will trigger a fresh sell-off. In that event, the stock could even touch Rs 60. A close above resistance has the potential to push it higher to Rs 144.
F&O pointers: Traders unwound their positions fearing a further fall in this counter. Option trading also presented a negative outlook.
Strategy: Traders can short HDIL with a stop-loss at Rs 97 for an initial target of Rs 78. Stop-loss can be shifted to Rs 85 if it dips below that level.
Follow-up: Last week, we had advised traders to consider short-straddle (selling call and put) on Cairn India, using 340 strike. Despite sharp gains, the position is neutral.
As advised, traders can continue to hold on to the strategy till expiry. We had also recommended shorting Tech Mahindra. Traders can hold on to the short with the recommended stop-loss level.
Note: Feedback or queries (on positions) may be sent to f&o@thehindu.co.in, blfuturesoptions@gmail.com by Sunday noon. Replies will be published on Monday.
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