The stock of Polycab India (₹4,976.7) finds an immediate support at ₹4,871 and the major one at ₹4,586. A close below the latter will change even the long-term outlook to negative.
On the other hand, Polycab India finds an immediate resistance at ₹5,240. A close above the resistance will change even the immediate term outlook positive. However, we expect the stock to move with negative bias in the short term.
F&O pointers: The counter witnessed a strong rollover of over 94 per cent from October to November series. The Polycab November futures closed at ₹5,009.95 against the spot price of ₹4,976.70. This signals addition of long positions and unwinding of short positions on Friday, due to a sharp rise in the stock price. Option trading indicates that the stock could move in ₹4,500-5,200 range.
Strategy: We advise traders to consider buying the November expiry 4900-put option on Polycab. The contract closed at ₹96.05 on Friday. As the market lot is 100 shares, this would cost ₹9,605, which would be the maximum loss in this trade. Traders will face maximum loss if Polycab India rules above ₹4,900 on expiry.
On the other hand, a fall, that too swiftly, will generate strong gains. The break-even point is ₹4,803.95. We advise traders to hold the position for at least two weeks and can be reviewed later.
While the initial stop-loss can be placed at ₹40, traders can aim for a premium of ₹140 as target.
Follow-up: Recommendation on HAL hit the target.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading