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Reliance Communications (₹82.8): The outlook remains negative for Reliance Communications. The stock appears to be headed towards its crucial support which is placed at ₹70. The stock finds minor support at ₹77. Only a close above ₹96 will change the short-term outlook to positive for the counter.
F&O pointers: The RCom futures witnessed unwinding of open positions on Friday along with a fall in share price. Option trading also indicates slightly bearish bias, as calls added open positions.
Strategy: Traders can consider selling Reliance Communications futures with a stop loss at ₹84 for an initial target of ₹70. This strategy is for traders who can take high risk, as the loss will be unlimited. Market lot is 2,000 shares per contract.
Alternatively, traders who wish to take less risk can buy ₹77.5 put options, which closed at a premium of ₹1.55. This strategy will incur an outflow of ₹3,100, which will be the maximum loss if RCom trades above ₹77.5. On the other hand, a close below ₹76 will be positive.
Follow-up: Traders can hold on to last week’s recommended strategy on TVS Motor as the stock moved on expected lines.
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