The outlook appears bright for the stock of Mahindra & Mahindra (M&M) (₹2,866.65). Immediate support appears at ₹2,699 and the major one at ₹2,493. Only a conclusive close below the latter will alter the bullish outlook on M&M.
On the other hand, if M&M sustains the current rally, the stock has the potential to reach new highs. A close above ₹2,915 will support the bulls well. We expect the stock to move sideways with upward bias.
F&O pointers: M&M witnessed a rollover of 88 per cent to July series. Most of the rollovers were on the long side. M&M July futures closed at ₹2,865.40 against spot price of ₹2,866.65. Option trading indicates that the stock could move in the ₹2,400-3,000 range.
Strategy: We advise traders to consider bull-call spread on M&M by buying 2860-strike call and simultaneously selling 2900-strike call. These options closed with a premium of ₹94.95 and ₹77.60 respectively. This will cost traders ₹17.35/lot or ₹6,072.50/lot. This will be the maximum loss in this strategy, which will happen if M&M slips below ₹2,860.
On the other hand, a profit of ₹7,927.50 is possible if M&M crosses above ₹2,900. We advise traders to hold the position for two weeks at least, if the profit is not achieved earlier.
Follow-up: We advised a calendar put spread strategy on Hindalco. The position would be marginally down. We advise traders to hold the long put of the July series for two more weeks.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading