1. Reliance Industries Ltd
| Counter | RELIANCE 2548 |
| Call | Buy on dip |
| Target 1 | 2600 |
| Target 2 | 2650 |
| Stop Loss | 2460 or 2420 |
| Time Horizon | 3-4 weeks |
| Notes | Buy-on-dip towards 2520 & Avg around 2470 |
Reliance Industries is the largest private-sector company in India. It is involved in the oil refining, petrochemical, gas, retail and textile businesses and boasts consolidated sales of more than $60 billion. Reliance’s products and services portfolio touches almost all Indians on a daily basis, across economic and social spectrums.
| Previous Close | 2,536.5 | TTM EPS | 95.7 |
| 52 Week High | 2,856.4 | TTM PE | 26.6 |
| 52 Week Low | 2512.4 | P/B | 2.1 |
| Sector PE | 31.1 | Mkt Cap (Rs. Cr.) | 17,23,366 |
(Source: Moneycontrol, BSE, Fisdom Research)
Technical Outlook
(Source: Fisdom Research)
- Reliance has been consolidating with a positive bias above 2450 for the past five weeks.
- The counter’s setup and structure are positive, and this index heavyweight is currently trading around its positional cluster zone of support levels at 2600-2650. Staying above this range could lead to a new upward movement soon.
- In the short term, the counter has immediate support between 2450-2400 levels, and it faces resistance at 2650. Further up, the next higher resistance is at 2800 over the upcoming weeks.
- Considering this, it might be a good idea to consider cautious long trades during price declines, with a stop placed below 2400. The potential target could be 2650 initially, and possibly even higher levels after that, all within the next few weeks.
Open Interest Study
- In August, Reliance Industries has a significant amount of Call Option (CE) contracts at the 2600 Strike, which acts as a strong resistance for the bulls. On the other hand, the 2500 Put Option (PE) has the highest number of contracts, serving as a support level or a battleground between the bulls and bears.
- Considering this scenario, it might be a good approach to consider hedged long strategies at the current levels and during price declines.
F&O Strategy
| Scrip | RELIANCE 2548.00 |
| Risk | Moderate |
| Ratio | 1:2 |
| Bias | Holding above 2450 – “Range to up” |
| Max Reward Expected | ₹17,800 |
| Max Risk Expected | ₹ 4,700 |
| Action | Scrip | Lot Size | IP | LTP |
| BUY | RELIANCE AUG 2540 CE | 250 | 46.5 | 46.5 |
| SELL | RELIANCE AUG 2640 CE | 500 | 13.85 | 13.85 |
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2. Coal India Limited
| Counter | COALINDIA LTP 234.95 |
| Call | Buy on dip |
| Target 1 | 250 |
| Target 2 | 264 |
| Stop Loss | 220 or 215 on close |
| Time Horizon | 3-4 weeks |
| Notes | Buy-On-Dip towards 228 & 222 |
Coal India Limited (CIL) the state owned coal mining corporate came into being in November 1975. With a modest production of 79 Million Tonnes (MTs) at the year of its inception CIL today is the single largest coal producer in the world and one of the largest corporate employer with manpower of 272445 (as on 1st April, 2020). CIL functions through its subsidiaries in 84 mining areas spread over eight (8) states of India.
| Previous Close | 234.0 | TTM EPS | 44.3 |
| 52 Week High | 263.4 | TTM PE | 5.3 |
| 52 Week Low | 207.6 | P/B | 2.5 |
| Sector PE | 5.8 | Mkt Cap (Rs. Cr.) | 1,44,762 |
(Source: Moneycontrol, BSE, Fisdom Research)
Technical Outlook
(Source: Fisdom Research)
- Looking at its technical analysis, Coal India’s stock has been trading within a range of 200 to 260 for the past year.
- In the last four weeks, the counter has been moving within a narrow range of 220 to 250.
- In the bigger picture, the overall bias is towards an upward move as long as it stays above 220. For short-term traders, there’s also an opportunity for a hedged long trade in this stock.
- In the near term, it’s suggested to consider buying when the stock dips towards 228 and 222 levels. The potential targets could be 248 and 260 levels in the future.
Open Interest
- According to the Option Chain analysis, there’s a significant number of Call Option contracts at the 240 and 250 Strikes for Coal India. On the other hand, there’s a high number of Put Option contracts at the 230 and 220 Strikes.
- When we consider both the price movement and the Option Chain data, it suggests that it might be a good idea to consider hedged long strategies when the stock dips to around 230 or even lower. This seems favorable considering the risk and potential rewards.
- In a broader sense, the Call Options at higher strike levels need a strong trigger to lead to major short-covering. Otherwise, the stock could continue trading within a range while maintaining a positive bias.
F&O Strategy
| Scrip | COALINDIA LTP 234.95 |
| Risk | Moderate |
| Ratio | 1:1 |
| Bias | Holding above 220 – “Range to up” |
| Max Reward Expected | ₹ 27,510 |
| Max Risk Expected | ₹ 14,500 |
| Action | Scrip | QTY | IP | LTP |
| BUY | COALINDIA AUG 230 CE | 4200 | 5.55 | 5.55 |
| SELL | COALINDIA AUG 240 CE | 4200 | 2.1 | 2.1 |
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