Technical Analysis

Stock strategy: Positive bias in Alok Ind, Biocon

K.S. Badri Narayanan | Updated on November 15, 2017 Published on February 04, 2012




Alok Industries (Rs 21.5): While the long-term outlook remains weak for Alok Industries, in the short-term the stock could show some resilience.



The stock made a strong recovery last week. It finds immediate resistance at Rs 27 and support at Rs 18.1. A close above the resistance can lift the stock towards Rs 33. Only a close above Rs 54 will change the outlook positive for the stock.



F&O pointers: Fresh longs were initiated on Alok Industries on Friday. Option trading indicates that Rs 20 would be tough to break.



Strategy: Traders can go long on Alok Industries with a stop loss at Rs 20(spot price on a closing day basis). Since the market lot is 11,000 shares per contract, traders with high-risk appetite can consider entering into the strategy.



Alternatively, traders can also write (sell) 20 put, which closed on Friday at 55 paise.



While maximum profit in the strategy is the premium collected, loss could be unlimited if Alok Industries falls sharply below Rs 20. This strategy is also for traders with a high-risk appetite only.



Biocon (Rs 280): While the medium-term outlook remains negative for Biocon in the short run, the stock can witness a recovery. The stock finds key resistance at Rs 324 and support at Rs 256.



Only a close above Rs 375 will change the outlook to positive for Biocon.



On the other hand, a fall below Rs 256 will trigger a fresh downfall for the stock. In that event, it can go to Rs 203 level.



F&O pointers: Biocon accumulated fresh long positions on Friday. Options did not see any activity.



Strategy: Traders can go long on Biocon February futures with a stop-loss at Rs 256 for an initial target of Rs 324. If it opens on a positive note, stop-loss could be shifted to Rs 280. Market lot is 1,000 shares.



Follow-up: Last week we had recommended short-strangle on NTPC and a short on IFCI with a stop-loss at Rs 31.



Traders can hold on to both the strategies. NTPC can be held till expiry as the stock is hovering around Rs 175 level.



IFCI, on the other hand, closed above Rs 31 in the spot market. However, as mentioned last week, traders who are willing to take high risk, can hold on to IFCI futures with Rs 33 as stop-loss on a closing day basis.



Feedback or queries (on positions) may be sent to >f&o@thehindu.co.in.



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