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M&M Finance Trading Strategy

Date and Time

• Last Updated: September 06, 2024 | 7:00 AM IST
• First Published: September 06, 2024 | 6:37 AM IST

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Recommended Trade

• Action: Buy M&M Finance (26-Sept Expiry) Rs 330 CALL at Rs 8.7
• Simultaneous Action: Sell Rs 340 CALL at Rs 5.20

Trade Specifications

• Lot Size: 2,000 shares
• Cost of the Strategy: Rs 3.5 (Total = Rs 7,000 per strategy)
• Maximum Profit Potential: Rs 13,000, provided M&M Finance closes at or above Rs 340 on the expiration date of September 26.
• Breakeven Point: Rs 333.5
• Risk-Reward Ratio: 1:1.86
• Approximate Margin Required: Rs 23,000

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Rationale Behind the Strategy

Recent market activities indicate a substantial long build-up in M&M Finance Futures throughout the September series. During this period, we have observed a notable rise in open interest by 7%, accompanied by a 5% increase in price. This trend signals that a bullish momentum is likely to persist.

Additionally, the stock price has successfully broken out of a downward sloping trend line on its weekly chart, which is further validated by an increase in trading volumes. This breakout suggests a possible upward trajectory for the stock, making it an attractive buy.

On a broader scale, the monthly chart reveals the stock’s formation of a bullish pattern characterized by higher tops and higher bottoms. This technical indication is reinforced by various momentum indicators and oscillators, which show a robust strength in the stock’s current uptrend.

Expert Insight

This analysis is provided by Nandish Shah, a technical research analyst at HDFC Securities. The views expressed are solely his own and reflect his analysis of market trends.

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Role of AI legalese decoder

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