Stock Strategy: Consider shorting Reliance Industries

Traders can consider going short on Reliance Industries keeping the stop loss Rs 848 for an initial target of Rs 694. Shift the stop loss to Rs 786 if it closes below that level.

Reliance Industries: The outlook for Reliance Industries seemed to be negative as it ended below the crucial support level last week.

The stock now finds immediate resistance at Rs 1,047 and only a conclusive close above Rs 1,141 would change the outlook to positive for stock.

The next support level appears at Rs 694, and it seems the stock is heading towards the support level.

A close below Rs 694 could weaken the stock to Rs 549.

F&O pointers: Reliance Industries futures added fresh short positions in August series.

The futures closed at a marginal premium with respect to the spot close. Reliance futures witnessed a rollover of about 84 per cent to the August series, which is quite normal.

Option trading indicates a slightly negative view for Reliance as calls added more open interest than puts.

Strategy: Traders can consider going short on Reliance Industries keeping the stop loss Rs 848 for an initial target of Rs 694. Shift the stop loss to Rs 786 if it closes below that level.

Traders can also consider writing 840 call that closed around Rs 20.5 on Friday.

While the maximum profit in this strategy is the premium collected, loss could be unlimited if Reliance moves up violently.

So this strategy is advisable only for traders who can afford to take risk. Those who have Reliance underlying stock can also consider this strategy, known as covered call strategy, to hedge their positions.

Market lot for Reliance is 250 shares and writing calls requires margin commitments.

NMDC: The outlook for NMDC is also negative. The stock now finds support at Rs 205 and the next one at Rs 167. The immediate resistance appears at Rs 254. Only a close above Rs 303 would change the outlook to positive.

F&O pointers: The NMDC futures added fresh short positions andsaw a rollover of 83 per cent, which is slightly above normal. Options were not active.

Strategy: Consider shorting NMDC for a target of Rs 167 with a stop loss at Rs 254.

If the stock closes below Rs 205, stop loss could be shifted to that level.

Follow-up: Last week, we had advised traders to consider going long on GSPL.

We remain positive on GSPL and advise traders to hold on to the position with the mentioned stop loss.

We had also advised traders to consider a long in Bank Nifty.

Those who are holding can continue to do so with a revised a stop loss at 10,750.

Feedback or queries (on positions) may be sent to >f&o@thehindu.co.in, >blfuturesoptions@gmail.com by Sunday noon. Replies will be published on Monday.

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