HDFC WEEKLY CHART
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This stock has been trading in a narrow range of Rs. 80 for the past 13 weeks. In sync with the market weakness, this stock too has been declining and has closed weak today at 665. However, it remains inside the triangle marked on the attached chart. The downside breakout level is at 650 level.
This is one of the leading Housing Finance Co. with almost 70% of its equity held by FII's. Another noteworthy point in favor of this stock has been that the Company has converted the warrants at Rs. 600 per share and interestingly, this stock has not broken this level for the past 1 year - despite the continued weakness in the market. The Company is scheduled to declare its results/dividend on Monday, 7th May 2012.
As a contrarian trade - considering the current market weakness. one can consider buying the stock at lower levels with stop loss of Rs. 630 or Rs. 600 depending on individual risk profile. In event of good results and market turn around, this stock can see a break out on the higher side at 685 and can offer good profit potential.
Considering that this month's FNO settlement (31st May) is still far away, one can even consider buying call option with strike price of Rs. 680 or Rs. 700 which closed today at Rs. 2.65 & Rs. 6.95 respectively.
As the markets remain weak, please do not forget to keep a suitable stop loss. One can minimize the risk by buying call option as referred above.
Have a nice weekend!
Ketan Asher.
Review of Bank Nifty Future
On 2nd May, I had put up a chart on Bank Nifty Future and had recommended a sell below 10200. Interestingly, the results have been too good and too fast. It closed t weak today at 9793. I would like to remind the readers - particularly those who have sold reading my post, to consider covering the shorts at around 9500 levels as it could provide good support - considering that it is 50% level as well as previous bottom.
