The long-term outlook for the stock of Hindustan Aeronautics Limited (HAL) (₹1,912.70) will be bullish, as long as it remains above ₹1,566. However, in the short-term, we expect the stock to remain under pressure.
The immediate support appears at ₹1,895. A close below that will weaken the stock further to ₹1,820. The nearest resistance is at ₹1,956 and a close above this will change the short-term outlook positive for HAL. In that event, the stock has high potential to breach its all-time high of ₹2,085.
F&P pointers: Hindustan Aeronautics October futures closed at ₹1,910.85 and November at ₹1,915.95 against the spot price of ₹1,912.70. This indicates the existence of short positions in the current series and long unwinding in the November series. Option trading indicates that Hindustan Aeronautics can move in ₹1,800-2,000 range.
Strategy: Go short on HAL futures. Since this strategy carries higher risk, it is strictly for traders who can withstand wild swings and can meet margin commitments.
Initial stop-loss can be placed at ₹1,935 for a target of ₹1,895. If the stock opens on a weak note, stop loss can be placed at ₹1,910. Traders should bear it in mind that HAL is a high beta stock and could see considerable swing in price.
So, it is prudent for traders to book profits according to their risk-taking ability. If the stock opens on a volatile note either up or down, traders can stay away from this strategy.
Options are quoting with higher premium currently, hence risk-reward ratio will not work in trader’s favour.
Follow-up: Book profit in Hero MotoCorp, as the stock moved on expected lines. Stop-loss would have triggered on Marico, recommended in the previous week.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading