Exide Industries has given a horizontal trendline breakout on the daily scale. It has outperformed frontline indices and marked a fresh all-time high on Thursday.
According to Sudeep Shah, DVP and Head of Technical and Derivative Research at SBI Securities, "The stock is trading above its short and long-term moving averages, which are in a rising trajectory, indicating a bullish sign. The momentum indicators and oscillators are also supporting the overall bullish chart structure.”
For leveraging the current bullish sentiment, Shah suggests bull call spread option strategy in Exide Industries stock.
Strategy Recommended by Shah:
Exide Industries Spread Trade: (Bull Spread - June 27 Expiry)
Buy 520 CE at cmp Rs 25
Sell 525 CE at cmp Rs 23
Net Outflow (Max Risk): 2 points
Date of Initiation: 6th June
Date of Expiry: 27th June
Maximum Potential Risk: 2 points (Rs 3,600 per pair)
Maximum Potential Gain: 3 points (Rs 5,400)
Profitable Zone: Above 522
Derivative Setup
“The current derivative data is in sync with the existing bullish chart structure. The June futures saw a substantial uptick of nearly 8 percent on Wednesday’s trading session, while the cumulative open interest across the current, next, and far series has surged by over 4 percent. This suggests a widespread build-up of long positions, reflecting the prevailing optimism among market participants,” said Shah.
A significant concentration of call open interest is evident at the 530 strike, while substantial open interest on the put side is concentrated at the 510 strike. Option chain analysis show there has been a discernible accumulation of long positions from 515 to 580 call strikes. Conversely, on the put side, there is noteworthy put writing observed from 560 to 500 strikes. "This clearly indicates bullish momentum in the stock," said Shah.
Shah believes this collective data suggests a bullish sentiment in Exide Industries. It is likely to test the level of 550, followed by 570 in the short term.
Technical View
"The stock has been trading at an all-time high, maintaining its position above key moving averages which are trending upwards," highlighted Shah. "This is a strong bullish indicator. Moreover, the momentum indicators such as RSI and stochastic are aligning with the overall bullish chart structure, reinforcing the positive outlook."
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