The stock of NTPC (₹174.35) has been moving in a narrow range for quite some time now. Only a breakout from the band of ₹157 on the downside or ₹184 on the upside will set a clear trend for the stock. The stock is currently around the range’s upper band. A close above ₹184 will lift the stock towards ₹245. On the other hand, a close below ₹157 will weaken NTPC towards ₹140. However, we are bullish on NTPC.

F&O pointers: The counter witnessed a roll-over of just 4 per cent. However, most of the positions are on the long side, as NTPC May futures ended at ₹175.15 against the spot close of ₹174.35. Options are not very active. A few available cues indicate that NTPC could face a strong resistance at ₹180.

Strategy: We advice taking long positions in NTPC futures at the current level. The stop-loss can be placed at ₹165 initially, and shifted to ₹184, if NTPC makes a conclusive close. Investors aiming at a target of ₹245 should have patience in the stock as it is a slow-mover. So one has to wait for at least four to six months.

Alternatively, traders could consider a bull calendar spread on NTPC. This can be initiated by buying ₹180-May call and simultaneously selling the current month call; they closed with a premium of ₹2.90 and ₹0.60 respectively. This entails an outgo of ₹9,200 as the market lot is 4,000 shares.

The maximum loss one can suffer in this strategy is the premium paid, while the profit potentials are huge if NTPC falls initially and rises from April 27. Hold the position for at least three weeks.

Follow-up: Hold DHFL positions mentioned last week.

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