Comments
The stock of Infosys (₹3,315.5) is at a crucial level. The long- and medium-term outlook remains positive if it stays above ₹3,295, closer to its current price.
However, the stock’s recent fall from ₹3,847 suggests that it may break the crucial support level which can take the stock lower to ₹2,995. Infosys finds immediate resistance at ₹3,420.
F&O pointers: The Infosys futures accumulated short positions. Option trading indicates ₹3,400 as the crucial level on the long side and ₹3,200 and ₹3,000 on the short side.
Strategy: The company is announcing its Q4 and full-year results for 2013-14 on April 15.
Analysts will be keenly watching the company's guidance for the current fiscal. During the past several results seasons, the stock provided an excellent trading opportunity with big swings of at least 8 per cent. We expect a similar trend this time, too.
Traders can consider long straddle on Infosys using the ₹3,300-strike. While the ₹3,300 call closed at a premium of ₹132, the same strike put is quoting at a premium of ₹102.15. This strategy will cost investors an initial outflow of around ₹29,250, which could be the maximum loss. The stock has to close above ₹3,525 or below ₹3,065 to turn the position profitable. Maximum loss occurs if the stock is stuck around ₹3,300. The position can be exited if the loss mounts to ₹7,500.
Alternatively, traders can also consider long strangle, which can be employed by buying ₹3,200 put and ₹3,400 call, which closed at a premium of ₹64.2 and ₹85.75, respectively.
The maximum loss in this strategy is around ₹18,745, which will occur if Infosys is stuck in the ₹3,200-3,400 range. A close above ₹3,550 or below ₹3,050 will turn the position profitable.
Exit the position if the loss touches ₹5,500 The only risk in the above strategies is the time value, as this month has many trading holidays (April 8, April 14, April 18 and April 24).
Follow-up: The United Spirits stock has moved on expected lines.
Traders can consider holding the position.
Comments
COMMENT NOW
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.