State Bank of India (₹1,994): After a sharp rally in the last few months, SBI could see some moderation. The immediate support is at ₹1,881. A close below this level will drag the stock down to ₹1,753. A close below ₹1,635 will change the medium-term outlook negative. On the other hand, SBI faces immediate resistance at ₹2,038 and then at ₹2,225. The long-term outlook will turn positive only if SBI closes above ₹2,805.
The stock could test its support levels in the short-term.
F&O pointers: On Friday, the stock witnessed unwinding of open interest , accompanied by a price fall . Over 2.3 lakh shares were squared off on Friday, indicating profit taking . Option trading indicates a range of ₹1,800 to ₹2,000 . Unwinding of open positions was seen on both call and put sides across strike prices indicatinga limited movement for the counter.
Strategy: Traders could consider buying ₹1,980 or ₹1,960 put options. They are quoting at a premium of ₹ 36.05 and ₹28 respectively. The maximum loss in this plain vanilla option strategy is the premium paid, which works out to ₹4,500 (for the former) and ₹3,500 (for the latter). The market lot is 125 shares per contract.
High risk appetite traders can consider going short on SBI futures with an initial stop-loss at₹2,025 which can be later shifted to ₹1,984 if SBI trades below that level. Target is ₹1,880.
Follow-up: Last week, we had advised traders a long strangle (using ₹3,200 put and ₹3,400 call) or straddle (₹3,300-strike) on Infosys ahead of its quarterly results, which is scheduled on April 15. Hold this position, as big swings post result could yield better returns.
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