The outlook for the stock of Maruti Suzuki India (₹11,513.80) is neutral for the medium term. Immediate resistance are at ₹12,020 and ₹12,785 while supports appear at ₹11,400 and ₹11,165.
We expect the stock to recover from support level in the short term.
F&O pointers: Maruti March futures closed ₹11,540.50 against the spot price of ₹11,513.80. This healthy premium indicates existence of long positions despite the stock moving with downward bias over the last two weeks.
However, last week, Maruti moved in a narrow range. Option trading indicates that it could move between ₹11,000 and ₹13,000.
Strategy: Consider buying 11,500-strike call on Maruti Suzuki that closed with a premium of ₹193 last week. As the market lot is 50 shares this would cost traders ₹9,650. This would be the maximum loss and that will happen if Maruti stays below ₹11,500 on expiry. However, profit potentials are good if the stock moves up sharply.
We advise traders to keep the stop-loss at ₹100 and aim for a target of ₹250. Stop-loss can be shifted to ₹190 if Maruti opens on positive note and the premium moves past ₹200. The break-even point is ₹11,693.
Follow up: Contrary to our expectations, the stock of BHEL slipped sharply. However, we advise traders to hold the 200-call for one more week, as there is a possibility of bounce-back.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading
