Technical Analysis

Future Perfect

KS BADRI NARAYANAN | Updated on January 17, 2018 Published on August 28, 2016

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Go long on Bharti Airtel

The Bharti Airtel (₹344) stock rules at a crucial level. The short-term outlook will turn negative if the stock fails to sustain above ₹336. The medium-term outlook will also turn negative if Bharti Airtel declines below ₹305.

The stock could move within a range of ₹310-385 in the medium term. A close above ₹385 will change the medium-term outlook to positive.

In such an event, the stock can head towards ₹550.

F&O pointers: It added 5.3 lakh shares in open interest. Option trading indicates a range of ₹340-360.

Strategy: Traders with high-risk appetite can consider going long on Bharti Airtel futures with a stop loss at ₹336 for a target of ₹367.

Traders with less risk appetite can consider bull-call spread on Bharti Airtel. This can be initiated by buying ₹340-call and simultaneously selling the ₹360-call. They closed with a premium of ₹13 and ₹4.7 respectively. It will incur an initial outflow of ₹12,450 (market lot 1,500), which would be the maximum loss.

This will happen if the stock closes at or below ₹340. But a profit of ₹16,500 is possible if Bharti Airtel manages to close at or above ₹360. Traders could consider exiting if the loss mounts to ₹5,000. Hold the position till expiry.

Follow-up: Hold Nifty 8600 Nifty call option, for at least two weeks, while Coal India strategy would have resulted in losses.

Published on August 28, 2016
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