06 May , 2024 By : Debdeep Gupta
TCS stock has formed a good base around Rs 3,800-3,830 and is set to cross the 20-DMA on the daily charts, outperforming the broader market in the coming sessions. On May 6, TCS shares gained over 2 percent to Rs 3,924 on NSE.
Arun Kumar Mantri, Founder of Mantri Finmart, said that the overall setup of TCS stock is bullish for the short term. He recommends buying TCS May series call options with a 3,950 strike to capture gains.
Trade details:Position: Buy TCS May Rs 3,950 Call Option
Entry: Rs 47-49
Target: Rs 74-79
Stop loss: Rs 34
Holding period: 5-6 trading sessions.
Technical view
"The recent price action in the counter is exhibiting strong bullish signals with technical indicators showing positive cross-over daily. The Bollinger band (20,2) is facing in the northward direction and is expected to expand in the coming sessions. On the other hand, the Nifty IT index is also at the crucial support zones which may be a good buying opportunity," said Mantri.
Derivatives Data
Mantri highlights that on the option chain, Rs 3,900 and Rs 4,000 CE of TCS have good OI of around 75,000-90,000 shares, indicating some short covering may happen in the stock once the spot price crosses Rs 3,900-3,920 mark.
"The overall open interest in the futures space is also indicating some short covering from the current juncture indicating strong buying momentum likely to emerge after the recent underperformance in the stock and the overall sector. Short-term traders may look upon ATM CE of Rs 3,950 CE of the current month of May series for the short-term perspective, " he added.
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