Can I buy United Breweries futures at this level? How far can it go up?
Aneesh
United Breweries (₹1,611.55): Buying the futures contract at the current level is not advisable. Because, the underlying — the stock of United Breweries is right at the middle of the nearest support and the immediate resistance. This makes the risk-reward ratio unfavourable.
There is falling trendline resistance which the stock could meet at around ₹1,640. Above this, ₹1,650 can be a hurdle. On the downside, the scrip could touch a rising trendline support at around ₹1,580. Subsequent support is at ₹1,560.
That said, this stock has been outperforming Nifty 50. Since October 16, when the recent broad market fall began, Nifty 50 has lost 3.5 per cent whereas United Breweries has appreciated 2.9 per cent. So, the stock appears positive and you can buy if there is a correction in price.
Buy United Breweries November futures if the price falls to ₹1,580. Place stop-loss at ₹1,550. Target can be ₹1,640. When the contract rises above ₹1,610 after you take long, revise the stop-loss to ₹1,585.
Will the share price of Mahindra & Mahindra fall more? Suggest a short-term F&O strategy
Ram
Mahindra & Mahindra (₹1,510.8): The stock is showing a sign of a bearish reversal as it has formed a head and shoulder (H&S) pattern on the daily chart. The neckline of this pattern is at ₹1,510. As the stock closed near this level on Friday, the chart pattern is yet to be confirmed. Also, ₹1,500 is a support.
So, stay on the fence for now and buy the 1500-put option (November series) when Mahindra & Mahindra decisively falls below ₹1,500. This put option closed at ₹29.4 on Friday. When the stock slips below ₹1,500, the price of this option could go up to approximately ₹40.
Although H&S pattern hints at a fall to ₹1,370, there are several supports above this level. Moreover, the potential decline to ₹1,370 could take time that can result in time decay of the option. So, consider exiting the put option when the stock price touches ₹1,460, the nearest notable support below ₹1,500.
After going long at around ₹40, keep a stop-loss at ₹25. Book profits at ₹70.
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