M&M's long-term outlook remains positive

I purchased two lots of Mahindra & Mahindra current month series at Rs 832. Please suggest trading strategy with stop-loss. — R Lalitha

The long-term outlook remains positive for M&M. However, the stock is unable to pierce the resistance with vigour. While the immediate support appears at Rs 776, M&M faces strong resistance at Rs 875. A conclusive close below the support could drag Mahindra & Mahindra to Rs 665. The stock could scale new heights if it manages to close above Rs 875. In that event, M&M may reach 1,010. Having said this, the stock would find it difficult to breach the current resistance.

F&O pointers: The M&M futures added fresh long position, along with rise in share price. This indicates that traders added positions, expecting a further rise. Option trading indicates a neutral view as calls and puts accumulated open position, albeit marginally.

Strategy: Hold your positions with stop loss at your entry point for an initial target of Rs 875. Trail the stop loss so as to protect your profit.

I bought UCO Bank 80 call at Rs 2.20 and Lupin Nov futures at Rs 479.05. Please suggest trading strategies. — Angshuman Nandi

UCO Bank (Rs 69): The medium-term outlook for UCO Bank remains negative. The stock finds a major support Rs 60 and a close below that would change the long-term outlook negative. The stock finds immediate resistance at Rs 75 and a major one at Rs 98. A close above Rs 98 would change the outlook positive. In the short-term the stock is likely to move in a narrow range of Rs 75-65.

F&O pointers: The UCO Bank futures witnessed unwinding of open interest positions along with fall in share price. This does not bode well for the counter. Options are not that active. Unwinding in 70 put indicates it could face resistance at that level.

Strategy: Only a close above Rs 80 would turn your call active. It is unlikely to happen during this settlement, as you are holding deep out-of-the money option. Your position already turned sunk since the 80-call is quoting at a premium of 25 paise. Hold on to your position and exit if the premium rises.

Lupin (476): The long-term outlook remains positive for Lupin, as long as it stays above Rs 386. The stock finds a major support at Rs 457 and key resistance at Rs 487. A conclusive and forceful close above the key resistance will take the stock to unchartered territory. In that event it can go up to Rs 569 initially, and even to Rs 640.

F&O pointers: It witnessed unwinding of long position on Friday. Options are not active.

Strategy: Hold your position with a stop loss at Rs 457. If the stock opens on positive note, shift the stop loss to Rs 473 (spot price) on a closing day basis.

NOTE: The analysis and opinion expressed in this column are based on F&O data available at this point of time and on technical analysis based on past price movements. There is risk of loss in trading.

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