Bull Spread strategy on Manappuram Finance by HDFC Securities

Buy MANAPPURAM FINANCE APRIL 110 Call at Rs 6 & simultaneously sell 120 call at Rs 2.5

Lot Size: 6,000

Cost of the strategy: Rs 3.5 (Rs 21,000 per strategy)

Maximum profit: Rs 39,000 If Manappuram Finance closes at or above 120 on April expiry.

Breakeven Point: Rs 113.5

Rationale:

-- Long build up is seen in the Manappuram Finance Futures where we have seen 11 per cent (Prov) rise in the Open Interest with price moving up by 8 per cent.

-- The stock price has broken out from the downward slopping trendline on the daily line chart adjoining the close of April 9 and 20 April
 

-- NBFC, as a sector, is looking good for the short-term chart
 

-- RSI Oscillators has formed positive divergence while MACD has closed above the central line

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Disclaimer: Nandish Shah is a Technical & Derivative Analyst at HDFC securities. Views are personal.