The long and short-term outlook for Reliance Power (₹ 41.15) remains negative. The stock has an immediate resistance at ₹44 and the next hurdle is at ₹53.5. The short-term outlook will turn positive only on a conclusive close above ₹53. In that event, the stock has the potential to target ₹72.40. But as long as it trades below ₹44, it is all set to breach its life-time low of ₹38.05 recorded in November.
F&O pointers : The Reliance Power counter witnessed a decent rollover of 25 per cent to January series. No fresh build-up of long positions was seen. On the contrary, a lot of unwinding of positions has been happening in Reliance Power. Options are not very active. However, trading in options indicates that ₹40 is a crucial level.
Strategy : Traders can consider buying 40-put on Reliance Power of January contracts. The option closed with a premium of ₹1.25 on Friday. With the market lot being 12,000, this strategy could cost investors ₹15,000. This would be the maximum loss one can suffer in this strategy. For that to happen, the stock should close at or above ₹41.25.
However, profit potential is very large, if the stock turns negative. Hold the position till January 10. Traders could exit from this strategy if the loss mounts to ₹8,500.
Follow-up : Stop-loss would have triggered for Aurobindo Pharma.
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.