Go long on Berger Paints

The outlook for the stock of Berger Paints (₹277) is bullish. The stock finds an immediate support at ₹260, and a close below that will change the short-term view to negative. In that event, Berger Paints can decline to ₹242. However, it will not alter the long- and medium-term bullish outlook as long as Berger Paints stays above ₹227. If the current uptrend sustains, the stock could climb to ₹315.

F&O pointers: Berger Paints added 1.38 lakh shares in open interest along with rise in share price. This indicates that traders have created fresh long positions.

Strategy: We advice traders to go long on Berger Paints with a stop-loss at ₹260 initially. If Berger Paints opens on a positive note and sustains the gains, the stop-loss can be shifted to ₹272 and held for an initial target of ₹294.

This strategy is risky, as wild swings could erode investments very quickly. So only traders who can withstand wild swings and have deep pockets can consider this strategy. They may even consider rolling over their positions for a few months for a target of ₹340.

Alternatively, traders can buy ₹285-call on Berger Paints that closed at ₹5.75. As the market lot is 2,200, it will cost them ₹12,650. Exit the position if the loss mounts to ₹5,500 or at a profit of ₹8,000.

Follow-up: Hold India Cements short positions.


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