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Can you please share your technical view on TVS Motors in the short term (30 days)? I hold September futures at ₹967.
Sandeep
We assume that you are holding a long position on the stock of TVS Motor September futures (₹959).
The underlying — the stock of TVS Motor Company (₹954.45) — has been rallying since May. It took support at ₹600, and the trend remains bullish. However, there are signs of the rally getting weaker. For instance, the RSI on the daily chart, although not a textbook-defined bearish divergence, signals some weakness. Also, the candlesticks of the second and the third week of August show some selling pressure between ₹970 and ₹1,000.
But since the scrip has bounced off the 21-day moving average support at around ₹930 last week, and that there is a trendline support as well, you can continue to hold your longs. Nevertheless, there needs to be some risk-management to limit the loss in case there is a trend reversal.
We suggest you place a stop-loss at ₹920 for the futures.
But if you think this stop-loss is deep and it can hurt your account considerably if triggered, you can probably buy the 950-strike put option (September expiry) as a hedge now.
Exit both futures and put option when the stock sees a daily close below ₹920. Because a decisive close below ₹925 can turn the short-term trend bearish.
On the upside, you can consider exiting at ₹1,100.
Send your queries to derivatives@thehindu.co.in
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