Derivative strategy on Cummins by Nandish Shah of HDFC Securities

Buy Cummins 470 CALL at Rs 14.50

Stop Loss: Rs 11

Target: Rs 20

Lot Size: 1,200.

Rationale:

-- Long build-up is seen in the Cummins Futures’ where we have seen 8 per cent (Prov) rise in the Open Interest with Price moving up by 2 per cent.
 

-- Stock price has broken out on the daily chart with higher volumes where it closed at highest level since September 2

-- Short-term trend of the stock is positive where stock price is trading above its 5- and 20-day Simple Moving averages

-- Oscillators like RSI is showing strength in the stock

-- +DI is trading above Minus DI while ADX is placed above 25, indicating momentum in the uptrend

Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.