Ipca Laboratories’ stock (₹1,062.65) has been steadily gaining since July. It took support at ₹675 and then started to rally. But after marking a 52-week high of ₹1,161.85 in early December, the stock lost steam. What followed was a decline in price and last week, it closed at ₹1,062.65.

However, the uptrend remains valid. Notably, the stock of Ipca Laboratories is now trading above the 50-day moving average, which lies at ₹1,047, a potential support. We expect the stock to resume the uptrend on the back of this level. Even if there is a decline from the current market price, it is likely to be restricted to ₹1,030. Hence, one can consider long positions.

Strategy: We recommend initiating fresh longs on Ipca Laboratories futures. Since the December contracts are nearing expiry, traders can consider buying January futures. This contract closed at ₹1,065.60 on Friday. Rather than initiating at the current level, traders can wait for the futures to moderate to ₹1,055 and then buy. Place initial stop-loss at ₹1,025.

When the contract rallies past a potential hurdle at ₹1,100, trail the stop-loss to ₹1,070 so that some part of the profits is protected even if Ipca Laboratories’ futures price witness a decline. Book profits when the contract hits ₹1,125.

Traders who wish to have lesser margin obligations can consider at-the-money call options. However, beware of the poor liquidity which can make your entries and exits difficult.

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

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