Future Perfect: Go long on Tata Steel

The short-term outlook remains neutral for Tata Steel (₹513.7). While only a close above ₹538 will change the outlook to positive, a conclusive close below ₹498 will reconfirm the bearish trend. A close above ₹538 has the potential to lift the stock to ₹592 and a close above ₹637 will make it bullish.

F&O pointer: The Tata Steel January futures has been adding open interest consistently over the last few days. The January futures have been trading with a healthy premium of over ₹3, signalling long positions. Option trading indicates a range of ₹500-540. Strikes of ₹580-calls and ₹620-puts too turned active, signalling resistance at these levels.

Strategy: This strategy is for those who can withstand wild swings. We advice traders to consider going long on Tata Steel futures, with a strict stop-loss at ₹498. If the stock opens on a positive note on Monday and moves past ₹516, the stop-loss can be shifted to ₹508. While the initial target is ₹538, traders with a high-risk appetite and deep pockets to withstand wild swings can aim for ₹592, which may not happen in this series. So this strategy is for traders who can prepare to rollover. Stop-loss can be adjusted suitably above ₹520 level, according to one’s individual risk profile.

Follow-up: As predicted, Sun TV hit the support level. But the stock hit the low within two days and bounced back strongly. Those who failed to book profits can still consider holding the position and exiting if the underlying stock hits ₹590.

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