Technical Analysis

Future Perfect: Bright outlook for Power Grid

| Updated on: Oct 15, 2017
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Power Grid Corporation of India (₹205.6) rules at a crucial level. The stock finds an immediate support at ₹198 and a close below that will change the short-term outlook negative. If the stock fails to sustain above ₹198, it has the potential to fall further and reach ₹166. Power Grid finds an immediate resistance at ₹212 and a conclusive close above this will trigger a fresh rally in the stock that could take it to a new heights — could touch ₹255 initially. The long-term outlook remains positive for Power Grid Corporation of India.

F&O Pointers: The Power Grid Corporation October futures added 1.6 lakh shares on Friday. However, over week-on-week, the open interests remained flat. Option trading indicates a range-bound movement of ₹200-₹210 for the stock.

Strategy: Traders could consider going long on Power Grid Corporation futures with a stop-loss at ₹198 initially. If the stock opens strongly and closes above ₹212, the stop-loss can be shifted to this level. While traders can aim for an initial target of ₹236, those who have high-risk appetite can even aim for ₹255. This strategy is for traders who can bear the risk, as they could suffer loss heavily on sharp swings.

Conservative traders could consider buying ₹210-call, which closed at ₹1.25. With market lot is 4,000 it will cost ₹5,000, which could be the total loss. This will happen if Power Grid fails to sustain above ₹210 level. However, the profit potentials are high if the stock surges sharply within this series.

Follow-up: Hold Reliance Capital positions; the stock moved on expected lines.

Published on January 08, 2018

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