Nandish Shah recommends a Bull spread on Glenmark Pharma for January series

Pharma as a sector looking good on the short term chart, according to Nandish Shah of HDFC Securities.

Bull spread strategy on Glenmark Pharma

Buy Glenmark Jan 530 CALL at Rs 21 and simultaneously sell 550 CALL at Rs 13

Lot size 1,150

Cost of the strategy Rs 8 (Rs 9,200 per strategy)

Maximum profit Rs 13,800 if Glenmark closes at or above 550 on 27 Jan expiry.

Breakeven Point Rs 538

Rationale:

• We have seen long build up in the Glenmark Futures, where we have seen 16%(Prov) rise in the Open Interest with price rising by 2%.
• Stock price has broken out on the daily chart to close at highest level since 13-Dec.
• Short term trend remain bullish as stock price is trading above its 5 and 20 day EMA.
• RSI and MFI Oscillators are placed above 60 and sloping upwards, indicating strength in the current uptrend.
• Pharma as a sector looking good on the short term chart.