Derivative strategy by Nandish Shah of HDFC Securities for Larsen & Toubro

The stock price has broken down on the daily chart to close at the lowest level since May 2016 with higher volumes.

Buy L&T March 820 Put at Rs 50 

Stop Loss: Rs 30

Target: Rs 85 

Lot Size: 375.

Rationale:

• Short build up is seen in the Larsen Futures’ where we have seen rise in the Open Interest yesterday with price falling by 6.7 per cent.
• Stock Price has broken down on the daily chart to close at the lowest level since May 2016 with higher volumes.
• Primary trend of the stock turned negative where it is trading below its 5,20 and 200 day SMA.
• Oscillators and Momentum Indicators like RSI and MACD showing weakness in the stocks.