The stock of Divi’s Laboratories (₹3,183.95), after a sharp fall since October 2021, found support at ₹2,730 last month. Since then, it is on a recovery path. The stock finds an immediate resistance at ₹3,305 and a conclusive close above that will change the medium-term outlook positive. In that event, Divi’s Labs has the potential to reach ₹3,528.

The long-term outlook will turn positive only on a close above ₹4,290. The stock finds an immediate support at ₹2,920. We expect the stock to rally towards the above-mentioned resistances in the near term.

F&O pointers: Divis Labs April futures, at ₹3,182.65, is ruling at a discount to the spot price of ₹3,183.95. Nevertheless, we expect the stock to gain momentum and appreciate. Option trading indicates that Divi’s Labs can move in the ₹3,000-3,500 range.

Strategy: We advise traders to buy 3200-call that closed at a premium of ₹47.85. As the market lot is 150 shares, this will cost traders ₹7,177.50, which will be the maximum loss one can suffer. The maximum loss will happen if the stock closes at or below ₹3,200 on expiry. We advise traders to keep the initial stop loss at ₹18 which can be shifted to ₹35 if the premium rises above ₹50. Further, move the stop-loss to ₹55 when the premium crosses over ₹65. Traders can aim for the ₹75-85 range to book profits.

Follow-up: Strategy on Kotak Mahindra Bank would have given decent profits as the stock moved on expected lines.

Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading

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