Technical Analysis

Future Perfect: Go long on Gail India

KS BADRI NARAYANAN | Updated on January 17, 2018 Published on July 10, 2016

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Despite the recent weakness in Gail India (₹375.5), the outlook remains positive. As long as it stays above ₹358, the positive outlook will remain intact. The stock can very well record a new 52-week high. On the other hand, a close below ₹339 will change the outlook to negative.

F&O pointers: The Gail India July futures added 1.56 lakh shares in open interest on Friday. Option trading indicates a strong resistance at ₹400.

Strategy: Traders can consider going long on Gail India futures. While the stop-loss can be placed at ₹358, it can be shifted to ₹375 if the stock closes above that level for two consecutive days.

This strategy is for traders with appetite for risk. Besides margin commitment, wild swings can lead to huge losses. Those with deep pockets can even consider rolling over the position. Profits can be booked at ₹440. Losses can be cut at ₹358.

Alternatively, those who wish to play within limits can buy the ₹400-call. This closed at a premium of ₹4.75. While the maximum loss is the premium paid profit can be unlimited. Traders can book loss if the premium dips to ₹2.85 or book profits if it surges to ₹8.

Published on July 10, 2016
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