The long-term positive outlook remain intact for Larsen & Toubro (₹1,275), as long as it stays above ₹1,057. The stock finds an immediate resistance at ₹1,330; a conclusive close above that will trigger a fresh rally in the stock. In that event, the stock could scale to ₹1,525 levels. L&T faces an immediate support at ₹1,249 and a strong one at ₹1,140.
F&O pointers: L&T March futures added 5.91 lakh shares or 4.7 per cent on Friday, despite fall in the stock price. However, from March 8-15, open interests were declining quite steadily, signalling traders’ unwillingness to carry over their positions. Option trading indicates concentration of open interests in ₹1,340-call, signalling that the stock may face resistance at around ₹1,340.
Strategy: Traders can consider a long put calendar spread strategy on L&T. This can be initiated by selling ₹1,280-put of March and, simultaneously, buying ₹1,280-put option of April. They closed with a premium of ₹22.95 and ₹31.55 respectively.
This strategy will entail outflow of ₹8.65/contract or (₹6,450), which will be the maximum loss one can incur. This will happen if L&T share price closed at or above ₹1,280 at the time of expiry of April series.
On the other hand, profit potentials are very high. For that to happen, L&T has to move higher in the current series and and fall from April. We advice traders to hold the position till the expiry of April contracts.