Technical Analysis

Go long on Reliance Capital

KS Badri Narayanan | Updated on March 10, 2019 Published on March 10, 2019


The short-term outlook turned positive for Reliance Capital (₹190.50) in February. The stock finds an immediate resistance at ₹212, and a close above it can take Reliance Capital higher to ₹251. The positive outlook will remain intact as long as the stock stays above ₹163. However, the long- and medium-term outlooks are still negative for Reliance Capital. The stock is a highly volatile counter, and as the company plans to cut its debt in the next few months, fresh news developments could alter the positive view, without giving any time for traders to react.

F&O pointers: The volatile Friday saw Reliance Capital futures shedding open interest positions. Reliance Capital March futures are trading at a discount, albeit marginally, and saw a decline of 2.325 lakh shares in open positions. This signals that traders prefer to book profits due to the volatile nature of the stock. Option trading indicates a range of ₹180-200 for the stock.

Strategy: Traders can consider going long on Reliance Capital futures with a stop loss at ₹182.55 (spot price on a closing day basis). If the stock opens on a positive note and stays above that level in the initial hours, shift the stop loss to ₹190 and aim for an initial target of ₹212. Risk-averse traders could book-profit based on their risk-taking ability, above ₹198. Buying plain futures contract involves a higher margin commitment.

Alternatively, traders can also consider buying the Reliance Capital ₹200-call that closed with a premium of ₹7.10. Exit the position if the premium value rises to ₹12.50 or falls to ₹3.50.

Follow-up: As expected, Havells India shares closed the week on a positive note. Hold the position as suggested last week.


Published on March 10, 2019
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