Market Strategy

Build on IDFC; Bombay Dyeing looks weak

| Updated on: Feb 12, 2011

IDFC (Rs 135.6): After witnessing a steep fall in the last one month, IDFC showed some strength on Thursday and Friday.

The stock finds an immediate resistance at Rs 158 and the next at Rs 176, while it has a crucial support at Rs 123.

A close below the support has the potential to weaken the stock to Rs 97.

F&O pointers: The IDFC February futures closed with a marginal premium against the spot price of Rs 135.6. However, the futures witnessed heavy unwinding of long positions.

It shed about 12 per cent in open interest. This indicates that traders preferred to book profits.

Option trading indicates a positive bias, as calls witnessed unwinding of long positions. Heavy accumulation in 130 put indicates that 130 could act as a strong support.

Strategy: Consider going long on IDFC futures with a tight stop-loss at Rs 130 (spot price on a closing day basis). If IDFC opens on a positive note, shift the stop loss to Rs 135.

Alternately, traders can consider buying 140 call, which closed on Friday at Rs 2.65. Market lot of IDFC is 2,000.

Bombay Dyeing (Rs 297.4): The outlook remains weak for Bombay Dying despite its steep fall in recent times. The stock is ruling at its 52-week low levels. If finds an immediate support at Rs 281, failing which it could drop to a low of Rs 245. Bombay Dyeing finds an immediate resistance at Rs 342. As long as it stays below Rs 458, the outlook would remain negative only for the stock.

F&O pointers: The Bombay Dying futures added fresh short positions on Friday.

It closed at a marginal premium against the spot. Accumulation of 1.43 lakh shares (or 25 per cent) with a fall in price is a negative signal for the stock. None of the options witnessed any trading.

Strategy: Consider going short on Bombay Dyeing with a tight stop-loss at Rs 332. Shift the stop-loss to Rs 300, if Bombay Dyeing opens on weak note.

NOTE: Traders with little appetite for risk can stay away from both the strategies, as the overall market is set to witness high volatility.

Follow-up: Last week, we had advised traders to consider short on Sun TV and long on Polaris Software. Sun TV achieved the recommended target level.

Polaris, though opened on a positive note, did not touch our recommended target and instead hit our stop loss level.

Feedback or queries (on positions) may be sent to f& by Sunday noon. Replies will be published on Monday.

Published on February 12, 2011

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you