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Derivative strategy for Karnataka Bank by HDFC Securities

Buy Karnataka Bank June 105 Put @ Rs 3 

Stop loss: Rs 1.50 

Target: Rs 7

Rationale:
  • Short build up is seen in the Karnataka Bank Futures’ yesterday, where we have seen sharp rise in Open Interest with price falling by 5.70 per cent.
  • The stock has given bearish head and shoulder pattern breakdown on the daily chart by closing below the neckline support of Rs 109 levels with higher volumes.
  • Oscillators and Momentum indicators like relative strength index (RSI) and moving average convergence divergence (MACD) showing weakness in the stock on the weekly charts.
  • It is trading below its 5, 20 and 200 day simple moving average (SMA) Indicating stock is in downtrend for all the time frames.