The long- and short-term outlook for the stock of The Indian Hotels Company (IHCL) (₹215.45) has turned positive. The stock finds an immediate support at ₹194 and as long as it stays above ₹158, the long-term bullish outlook will remain unchanged. Immediate resistance appears to be at ₹224. We expect the stock to remain positive with minor intermittent corrections. If the current trend sustains, Indian Hotels has the potential to reach ₹245. Traders should keep it mind that being cyclical stock, Indian Hotels has been witnessing volatile trading pattern.
F&O pointers: Indian Hotels saw accumulation in open interest positions. From 3.27 lakh shares on October 5, open interests zoomed to 1.73 crore shares while share price moved between ₹185 and ₹235. IHCL November futures price at ₹213.10 is at a discount to the spot price of ₹215.45, signalling existence of short positions. Option trading indicates a range between ₹200-220.
![0611IndianHotelcolcol 0611IndianHotelcolcol](/theme/images/bl-online/1x1_spacer.png)
Strategy: Traders can consider a bull-call spread on IHCL, using ₹215-strike and ₹220-strike calls. This can be done by selling the latter and simultaneously buying the former, which closed with a premium of ₹7.65 and ₹9.40 respectively. This strategy will result in an outgo of ₹1.75/contract or ₹6,825 (market lot: 3,900 shares) which will be the maximum loss that will happen if Indian Hotels closes at or below ₹215.
On the other hand, a profit of ₹12,675 is possible, if the stock closes at or above ₹220. Hold the position till expiry.
Alternatively, traders, who can afford to take a risk and have patience to withstand wild swings, can consider going long on Indian Hotels futures with a stop loss at ₹204. Stop-loss can be shifted to ₹216 if this level is decisively breached. Initial target will be at ₹224.
Follow-up: Hold AU Small Finance recommended last week and HAL (for one more week).
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.