Technical Analysis

Future Perfect: Consider buying put on GAIL

KS Badri Narayanan | Updated on January 13, 2019 Published on January 13, 2019

After the Cabinet approval, a consultant will be appointed to transfer the pipeline business into a separate subsidiary

The long-term outlook remains positive for GAIL (India), though in the short term it may face headwinds.

The stock has an immediate support at ₹329 and a crucial one at ₹299.

A close below the latter will change the outlook to negative for GAIL India. On the other hand, the stock finds an immediate resistance at ₹372 and a close above that could reignite a fresh rally towards ₹425.

F&O pointers: GAIL's January futures have been accumulating steady open interest positions in the last 10 days, despite the stock witnessing continuous slide.

 

 

This signals build-up of short positions. Option trading indicates a range of ₹330 to ₹370 for the stock.

Strategy: Traders can consider buying ₹330-put, which closed at a premium of ₹5.20.

As the market lot for GAIL is 2,667 shares, this strategy would cost investors ₹13,868.40.

One can suffer a maximum of loss of the premium paid if Gail India moves up. But if the stock falls, that too swiftly, it could result in huge profits.

Traders can consider exiting GAIL India options if the premium rises to ₹12 or falls to ₹2.

Alternatively, risk-prone traders can consider going short on GAIL India futures, with a stop-loss at ₹344 initially, which can be shifted to ₹329 if the stock opens on a weak note and stays at that level on Monday.

Traders can consider booking profit if the futures dips to ₹320.

Follow-up: Hold SAIL positions as suggested last week

Published on January 13, 2019
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