I bought a Tata Elxsi 5000PE for ₹110. What is your forecast for the stock? Can I retain the put position? If yes, give me an exit price – Bharathi S
Tata Elxsi (₹5,612.50): The stock rallied last week until Thursday. The upward momentum appeared strong. However, the price declined on Friday as the scrip faced a resistance at ₹6,000.
Note that only a breakout of ₹6,000 can confirm a bullish trend reversal. That said, since the price has moved above both 20- and 50-day moving averages, it is not advisable to take short positions aggressively.
Given the prevailing price action, even though the stock can turn bullish by surpassing ₹6,000, there is a good chance that it will moderate to ₹5,000 before such a breakout.
A price decline to ₹5,000 within two weeks from now can lift the premium of 5000-put option (May expiry) roughly to ₹200. If this fall happens quicker (slower) than that, the premium can be higher (lower).
Our suggestion would be to hold the position and exit at ₹200. As a risk management measure, when the premium goes up to ₹150, place a stop-loss at ₹110.
But in case the stock rises above ₹6,000, exit the option at the prevailing premium since this breakout can turn the outlook positive.
As per my analysis, Indigo May futures has a support at ₹5,250. Hence, I bought May futures on Friday at ₹5,270 when the price declined on Friday. What can be the stop-loss and target for this trade? – A M Sathyan
InterGlobe Aviation (₹5,313.50): The stock has been in a steady uptrend since mid-January after it found support at ₹4,000. The price drop that happened in the last two sessions is largely a correction within the bull trend.
As you rightly mentioned, the May futures has a support at ₹5,250. In fact, the price band of ₹5,200-5,250 is a support. On the back of this, we expect the contract to resume the rally. It will most likely retest ₹5,600. So, we suggest having target and stop-loss at ₹5,600 and ₹5,150 respectively.
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Published on April 26, 2025
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