The outlook is neutral to negative in the short term for the stock of Wipro (₹411.7). Only a close above ₹459 will change the short-term outlook. If Wipro manages to achieve that, then the next resistance is placed at ₹552. Further rally and close above ₹603 will change even the long-term outlook positive.
On the other hand, support levels are at ₹398 and ₹382. We expect Wipro to witness sideways movement, but will attempt to hit the near-term resistance.
F&O pointers: Wipro August futures at ₹410.15 and September futures at ₹411.90 against the spot price of ₹411.70 indicates that traders are not willing to carry their long positions, while willing to hold their short positions. Option trading indicates that Wipro may move in the ₹400-450 range.
Strategy: Consider a bull-call spread on Wipro. Initiate by selling 415-call of current month and simultaneously buying the same strike call of next month. These calls closed with a premium of ₹4.10 and ₹10.60 respectively. As the market lot is 1,500 shares per lot, this would cost traders ₹9,750 which would be the maximum loss one can suffer. The maximum loss will happen if Wipro fails to cross ₹415.
On the other hand, if the stock rises sharply, profit potentials are very high. If Wipro declines or stays flat till the current month expiry and rises sharply next month, traders can make profit on both the options. We advise traders to hold the position for at least three weeks and review it later.
Follow-up: Federal Bank position is in the money; traders could book profits. ICICI Bank, recommended the previous week, would have triggered the stop-loss.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading