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The stock of NTPC (₹127) is on a long-term downtrend. From its early 2008 high of ₹291 , the stock has registered a multi-year low of ₹107 in August this year. Since then, it has been trying to recover.
We expect the stock to sustain the current momentum in the short term. If it manages to close above ₹132, it can reach ₹144 or even ₹160. However, a conclusive close below ₹118 will negate the outlook. In that event, NTPC can once again retest its crucial support at₹107.
F&O pointers: The NTPC October futures added fresh long positions on Friday and the accumulation of open positions was quite steady throughout the last week. This indicates a bullish signal. Interestingly even November futures — the lot size has been doubled to 4,000 also witnessed steady built-up in open positions. Trading in current month options indicates that the stock could move in the ₹120-130 range.
Strategy: Investors with high-risk appetite can consider a long position on NTPC futures for about two years. The stop-loss can be placed at ₹107 (for spot price on a closing day basis).
Risk-averse investors can consider exiting at ₹160. Others who have the wherewithal to handle volatility better can aim for a target of ₹204. In that case, the stop-loss can be shifted to ₹132 and then to ₹160 to protect the profit. Investors need to have high patience in this strategy as NTPC is one of the stocks that will not show any huge movement on most trading days.
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