The outlook for the stock of Polycab India (₹2,753.9) turned negative after a sharp fall on Friday. The stock now finds a crucial support at ₹2,521 and a close below that will alter the current long-term bullish outlook on the stock. A close below ₹2,462 will turn the outlook negative. The stock finds an immediate resistance at ₹2,818 and a conclusive close above that will reconfirm the positive outlook on the stock.
F&O Pointers: The Polycab December futures shed open positions in the last couple of days along with a price fall. The December futures closed at ₹2,753.85, on par with spot close of ₹2,753.9. This signals that traders were unwilling to carry over their positions. Option trading indicates that the stock will move in ₹2,500-3,000 range.
Strategy: Buy a 2,700-put option that closed with a premium of ₹43.70. As the market lot is 300 shares, this will cost traders ₹13,110, which will be the maximum loss. The maximum loss will happen if the stock rules above ₹2,700. The break-even point is ₹2,656.30.
On the other hand, profit potentials are high if the stock continues its slide sharply within a few days. We advise traders to enter the strategy if the premium hovers around ₹35-50 for a target of ₹75-80. While initial stop-loss can be placed at ₹35, it can be shifted to ₹45 if the premium jumps to ₹55. If the stock opens sharply lower, traders can stay away from this strategy.
Follow-up: Recommendations on Adani Ports (880 put) hit the target.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading