What is the near-term outlook for Britannia? Based on the outlook, should I go for futures or options?
Shrihari S
Britannia Industries (₹5,729.65): The stock faced a resistance between ₹5,950 and ₹6,000 in July and started to fall. But last week, it found support at ₹5,600. The 50-day moving average also lies at this level, making it a strong support.
A bounce on Friday indicates buying interest. Also, the broader trend for the stock is bullish. Therefore, we suggest taking long positions in the stock of Britannia Industries. In the short term, the price is likely to rally to the ₹5,950-6,000 resistance band. A breakout of ₹6,000 can lift the stock to ₹6,300 and then possibly to ₹6,500.
Though you can buy call options given the positive expectations, going ahead, the August expiry contracts can experience larger time decay. This can have an impact on the premium if the stock stays sideways. At the same time, in September option contracts, you might not have good liquidity. So, you might have to pay a higher price.
Therefore, considering the prevailing conditions, we suggest you buy Britannia Industries August futures (₹5,733.70). Like the underlying stock, the contract found support at ₹5,615 and rebounded on Friday.
Go long at ₹5,700 and place a stop-loss at ₹5,575. When the contract touches ₹5,825, revise the stop-loss up to ₹5,700. Trail the stop-loss to ₹5,820 when the price hits ₹5,900. Book profits at ₹5,940.
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