Technical Analysis

Future perfect: Consider ₹60-call on Tata Motors DVR

KS Badri Narayanan | Updated on August 19, 2019 Published on August 18, 2019

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.

Published on August 18, 2019
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