The outlook for Tata Motors DVR (₹56.50) remains bearish. The stock finds major support at ₹53.80. Immediate resistance is at ₹64.60 and the next one at ₹73. A close above ₹97.65 will alter the medium-term outlook to positive for Tata Motors DVR.
F&O pointers: Tata Motors DVR futures closed at ₹56.75, as against the spot price of ₹56.50. Tata Motors DVR August futures have been accumulating open interest along with fall in share price. This signals build-up of short positions. That said, the stock hovers in the oversold territory; short-covering can trigger a short-term rally. Trading in options indicates that the stock could face a strong resistance at ₹70.
Strategy: As we expect a bounce back from the sharp fall, we advice traders to consider buying ₹60-call on Tata Motors DVR. The call closed with a premium of ₹1.15 on Friday. With market lot being 6,000 shares, traders will have to fork out ₹6,900.
The maximum loss would the premium paid, for which Tata Motors DVR has to close at or below ₹60. On the other hand, profit potential is high, if the stock moves swiftly upwards over the next nine trading sessions. A close above ₹61.15 will start yielding positive returns for the position.
Traders can consider exiting the position at a profit of ₹5,500 or at a loss of ₹3,750.
Follow-up: Sun TV moved on expected lines. However, those who have not booked profits and can withstand wild swings can consider holding the position.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.