Technical Analysis

Future Perfect: Go long on Hindalco

KS Badri Narayanan | Updated on August 05, 2018 Published on August 05, 2018

The short-term trend turned positive for the stock of Hindalco Industries (₹212.9). If the current trend sustains, the stock can reach ₹248. The immediate support for Hindalco is at ₹198 and a close below this level will alter the current positive outlook on the stock. A close above ₹267 can trigger a fresh rally that can lift it to ₹300 level.

F&O pointers: Hindalco August futures shed 17.32 lakh shares in open interest on Friday despite the underlying stock closing on a positive note. Option trend indicates that the stock can move at around ₹220, where open interests for puts and calls are concentrated. Trading in options indicates that the stock may face strong resistance at ₹240.

Strategy: Traders can consider going long on Hindalco. While the stop-loss can be placed at ₹198 initially, it can be shifted to ₹213 if the stock opens on a positive note and closes above ₹217. Traders can aim for a target of ₹248.

Patient investors can even aim for ₹265. However, taking naked futures positions is a huge risk, as wild swings can erode the profit and capital quite easily. So, this strategy is for traders who can withstand volatility.

Buying call options are not advisable, given the risk-return ratio, as most of them trade at healthy premiums.

Follow-up: Investors can consider holding Biocon short futures, the position is slightly out-of-the money.

Published on August 05, 2018
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