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The stock of Tech Mahindra (₹1,649.50) is ruling at a crucial level. Support levels are at ₹1,608 and ₹1,540. A close below the latter might alter the long-term positive outlook.
Immediate resistance are at ₹1,705 and ₹1,762. A close above the latter will reignite the uptrend, potentially lifting the stock to new heights.
F&O pointers: Tech Mahindra February futures (₹1,650.20) and March futures (₹1,658.30) are ruling at a premium over the spot price of ₹1,649.50. Overall rollover of open positions currently stands at 21 per cent. Option trading indicates that the stock could move in the ₹1,500-1,720 range.
Strategy: Consider a calendar bull call spread on Tech Mahindra. Initiate by selling ₹1,640-call of Feb expiry and simultaneously buying same strike call from March series. As these options closed with a premium of ₹25.70 and ₹58.35 respectively, the net cost will be ₹32.65.
For a market lot of 600 shares, the net outflow will be ₹19,590. This will be the maximum loss and that will happen if Tech Mahindra fails to cross ₹1,640 on expiry. On the other hand, profit potentials are high, if the stock opens flat or on a negative note next week and rises sharply after the expiry of the current month.
Hold the position for at least two weeks. But exit the position if the loss mounts to ₹9,500.
Follow-up: Tata Power position hit the target.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.
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Published on February 22, 2025
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