Technical Analysis

Future Perfect: Go long on Tata Chemicals

K S BADRI NARAYANAN | Updated on January 12, 2018 Published on January 15, 2017

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After the correction in December, Tata Chemicals (₹518.7) has once again rediscovered its bull path. The stock finds immediate support at ₹493 and then a crucial one at ₹410. Only a close below the latter will alter the medium term outlook negative. If Tata Chemicals manages to sustain the current momentum, it is on the course to register new heighs. A close above ₹546 will reconfirm the bullish trend.

F&O pointers: Tata Chemicals witnessed unwinding of long positions on Friday. The counter shed 43,500 shares in open interest. However, on weekly basis, it added 5 lakh shares. We cannot discern any view from option trading, as they are not active. Some strikes of both call and put options shed open positions.

Strategy: Investors can buy Tata Chemicals futures. The position can be rolled over for at least a year for an initial target of ₹635. Stop-loss can be placed at ₹445 initially and can be shifted higher to ₹504 and then to ₹546.

Conservative traders can buy a ₹540-call that closed at ₹4.85 on Friday. With market lot being 1,500 shares/contract, the maximum loss can be ₹7,275. Traders can exit if the premium value dips to ₹4,500 or rises to ₹10,000.

Follow-up: Hold strangle strategy on Infosys.

Published on January 15, 2017
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