The immediate support for the stock of Bharat Heavy Electricals Ltd (BHEL) (₹196.95) appears at ₹179.17. A close below this can drag the stock towards ₹145. BHEL has resistance levels at ₹222 and ₹248. While the medium-term trend is negative, in the short term the stock may see a pull back.
F&O pointers: BHEL March futures closed at ₹197.72 against the spot close of ₹196.95. Open interest moved up from 38.16 lakh shares to 7.14 crore shares from February 11 even as the stock moved in narrow range between ₹180 and ₹205.
However, in the last two days BHEL shed open positions. The small premium indicates long positions and unwinding signals profit taking as well. Option trading shows that the stock could move in ₹170-210 range.
Strategy: Buy 200-call on BHEL that closed with a premium of ₹6.20. As the market lot is 2,625 shares, this would cost traders ₹16,275, the maximum loss. The maximum loss will happen if BHEL fails to cross ₹200 on expiry. Break-even point is ₹206.20.
Keep initial stop-loss at ₹2.50. Shift it to ₹6, if BHEL opens positively and the premium moves to ₹6.75-7. Traders can aim for a target of ₹10. Stop-loss can be adjusted swiftly to protect profit, as the stock may see higher intra-day volatility.
Follow-up: TCS moved on expected lines and hit the targets. Traders can book profit on TCS call option.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.
