F&O stock strategy: How to trade in MGL, IRCTC?

Indian equity indices traded at fresh record highs on Friday with S&P BSE Sensex trading at 69,684.63, up 162.94 points or 0.23% while the broader Nifty gained by over 50 points or 0.25% over the Thursday closing and trading at 20,953.85. The gains were led by FMCG, banks, and IT stocks.

A look at the derivatives data suggests that for the next weekly series, 21,000 CALL have significant open interest, followed by 21,200 strikes. On the PUT side, 20,900 has significant open interest, followed by a 20,800 strike implying the zone of 20,840-20,810 will act as immediate support for the index while 21,020 will act as immediate resistance for the index.

We spoke to analysts on how one should trade stocks that were in focus in the previous trading sessions based on derivative and technical data:


Analyst: Sudeep Shah, Deputy Vice President and Head of Technical and derivatives Research at SBI Securities told ETMarkets

MGL gives consolidation breakout
On Thursday, the stock of Mahanagar Gas gave a consolidation breakout and marked a fresh 52-week high. This breakout was supported by above 50-day average volume. In addition, the stock has formed a sizeable bullish candle on breakout day, which adds strength to the breakout.

Currently, the stock is trading above its short and long-term moving averages. These averages are in a rising trajectory and they are in the desired sequence, which suggests the trend is strong. The daily and weekly 14-period RSI is in bullish territory. The daily MACD stays bullish as it is quoting above its zero line and signal line. The MACD histogram suggests a pickup in upside momentum.

On the derivative front, the December series future has surged by 4.54%. The cumulative OI of the current, next, and far series has surged by 11.22%, which indicates a long build-up. The significant call open interest is at 1200 strike. On the put side, the significant open interest is at 1150 strike. On Thursday, from 1220 to 1160 CE strikes witnessed a long build-up. On the PUT side, from 1180 to 1100 PE strikes witnessed a short build up. This indicates bullish momentum in the stock.

These technical and derivative factors indicate strong bullish momentum in the stock. Hence, we recommend to accumulate the stock in the zone of Rs 1170-1160 level with a stop loss of Rs 1130. On the upside, it is likely to test the level of Rs 1225, followed by Rs 1250 in the short-term.

IRCTC chart portrays positive picture
The stock of IRCTC marked a low of Rs 633.20 in October 2023 and thereafter it started marking the sequence of higher tops and higher bottoms. On Thursday, it surged above its prior resistance of Rs 750-755 level. Since the last 4-trading sessions, the stock has witnessed above 50-day average volume, which indicates robust buying interest by market participants.

Since the last two trading sessions, the stock has been closing above the upper Bollinger Band, which shows strong momentum. As the stock is trading at a 20-month high, all the moving averages and momentum indicators are suggesting further upside in the stock. The 14-period daily RSI is in the super bullish zone as per RSI range shift rules. Mansfield Relative Strength is above the zero line since the last 23 trading sessions, which shows outperformance as compared to the Nifty 500 index.

On the derivative front, a long build-up is visible as the December future has surged by 2.42%. While, the cumulative OI of the current, next and far series has surged by over 8.02%. The significant call open interest is at 800 strike. On the put side, the significant open interest is at 750 strike. On Thursday, from 750 to 800 CE strikes witnessed a long build-up. At the same time, from 780 to 720 PE strikes witnessed short build-up. This indicates an overall bullish sentiment in derivative space.

Hence, we recommend to accumulate the stock in the zone of Rs 760-755 level with a stop loss of Rs 735 on closing basis. On the upside, it is likely to test the level of Rs 800, followed by Rs 820 in the short-term.

(You can now subscribe to our ETMarkets WhatsApp channel)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)