Nov. 7, 2009 (The Hindu Business Line) --
K.S. Badri Narayanan
The Sesa Goa stock is likely to see sharp swings, as it is at a critical juncture.
While a move above Rs 325 could lift the stock to Rs 345 and even as high as Rs 360-365 level, a fall below Rs 295 has the potential to weaken the stock to Rs 265 level and further down to Rs 233-35 level.
F&O pointers
The Sesa Goa futures (market lot 1500) shed 2.7 lakh shares in open interest on Friday after a steady accumulation during the week.
Among the calls, 300, 310 and 320 strikes were the most active while 300 and 280 strikes were active on the put side. The 320 call saw accumulation, while the 300 call shed open position, suggesting that 320 could act as a resistance. The 300 put also witnessed accumulation of open position, indicating that it could act as resistance. Consider going short on Sesa Goa, keeping the stop-loss at 325 (spot price on a closing day basis). Adjust the stop-loss progressively so as to protect the profit, if it opens on a weak note. Alternatively, traders can also consider buying Sesa Goa 300 Nov put, which closed the week at 14.5.
ICICI Bank (849): This is another stock that is ruling at a critical juncture. A move above Rs 885 could push the stock above Rs 950 and even to Rs 980. On the other hand, a dip below Rs 835 could weaken it to Rs 775 and further down to Rs 735 levels. We feel that the possibility of latter happening is higher. Despite the sharp recovery in the last few sessions, the ICICI Bank (NYSE:IBN) futures (market lot 350) witnessed steady decline in open positions. This suggests that the recovery was mainly due to short covering.
Consider going short on ICICI Bank futures keeping the stop-loss at Rs 885. The stop-loss has given at a wide gap from the current close. This makes the strategy suitable only for high-risk appetite traders.
Adjust the stop-loss progressively so as to protect the profit, if it opens on a weak note.
Follow up
While IDFC hit its stop-loss, NTPC still has the potential to reach our targeted level.
Feedback or queries (on positions) may be sent to f& o@thehindu.co.in. Replies will be published in the Monday edition.
