Deploy Broken Wing in LIC Housing Finance to benefit from bearish outlook
Synopsis LIC Housing Finance has entered a bearish phase after breaking down from a Rising Wedge pattern. With weakening technicals, rising volumes, and a declining RSI, analysts suggest a Broken Wing Butterfly strategy to benefit from the stock's downside while maintaining a defined risk profile. LIC Housing Finance shares are currently trading at Rs 590.30 and have recently entered a corrective phase after a prolonged consolidation. The stock had formed a Rising Wedge pattern on the daily chart—a bearish setup that often signals a potential reversal.
ADVERTISEMENT After facing consistent rejection from higher levels, it has now given a breakdown below the wedge, indicating growing selling pressure and a possible trend reversal.The stock has slipped below all its key short-term and medium-term exponential moving averages (EMAs), reflecting weakening structure and a lack of buying interest at crucial support zones.
'This breakdown is further supported by increasing volumes, hinting at strong participation from sellers,' noted Hardik Matalia, Derivative Analyst at Choice Broking.
The Relative Strength Index (RSI) is currently at 37.21 and trending downward, suggesting intensifying bearish momentum with room for further downside.'If LICHSGFIN breaches below the critical support level of Rs 580, it may trigger additional downside and extend the decline towards lower levels in the near term. Sustaining below this zone would validate the pattern breakdown and invite further selling interest,' he added.
ADVERTISEMENT On the derivatives front, the highest Put Open Interest (OI) is at the Rs 580 strike, making it a crucial support level.Matalia further added that a breakdown below this could lead to unwinding of long positions. On the Call side, the highest OI is seen at Rs 600, followed by Rs 620, which are expected to act as immediate resistance levels on any attempted pullback.
ADVERTISEMENT With this, Hardik Matalia suggests deploying a Broken Wing strategy in LIC Housing Finance to play the bearish outlook in the stock.
The Broken Wing Options Strategy, specifically the Broken Wing Butterfly (BWB), is a variation of the classic butterfly spread, which is used to take advantage of directional market moves while reducing risk and cost. It is called a "broken wing" because one of the wings of the butterfly is intentionally unbalanced to create a skewed risk/reward profile.This strategy lowers the initial cost or generates a credit while limiting both risk and reward on one side of the trade, typically used to capitalise on small directional moves with defined risk.
ADVERTISEMENT
Below is the payoff graph of the strategy: (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
(You can now subscribe to our ETMarkets WhatsApp channel)
Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share
Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained
Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Cyient shares fall over 9% after Q4 profit declines, core business underperforms
Cyient shares fall over 9% after Q4 profit declines, core business underperforms L&T Technology Services shares slide 7% after Q4 profit dips
L&T Technology Services shares slide 7% after Q4 profit dips Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first?
Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? SEBI warns of securities market frauds via YouTube, Facebook, X and more
SEBI warns of securities market frauds via YouTube, Facebook, X and more API Trading for All: Pi42 CTO Satish Mishra on How Pi42 is Empowering Retail Traders
API Trading for All: Pi42 CTO Satish Mishra on How Pi42 is Empowering Retail Traders Security, transparency, and innovation: What sets Pi42 apart in crypto trading
Security, transparency, and innovation: What sets Pi42 apart in crypto trading Bitcoin, Ethereum, or Altcoins? How investors are structuring their crypto portfolios, Avinash Shekhar explains
Bitcoin, Ethereum, or Altcoins? How investors are structuring their crypto portfolios, Avinash Shekhar explains The rise of Crypto Futures in India: Leverage, tax efficiency, and market maturity, Avinash Shekhar of Pi42 explains
NEXT STORY
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
4 minutes ago
- Time of India
I want to build a corpus of Rs 1 crore in 10-12 years. Where should I invest?
Academy Empower your mind, elevate your skills To achieve 12-15% CAGR, you'll need to invest aggressively in pure equity mutual funds , with a higher allocation to mid and small caps to drive higher returns. Since you are 35 and have a long time horizon of 12 years, you can take risk and look at investing 20% in growth-oriented flexicap funds, 20% in value-oriented flexi-cap funds, 20% in contra funds, 20% in growth-oriented mid-cap funds, and 20% in growth-oriented small-cap funds. This portfolio will help you diversify across different market caps and styles, which is very important for minimising underperformance risk and generating superior returns. To amass `1 crore (pre-tax), assuming 12% CAGR in equity for 12 years, you will need to start a monthly SIP of `35,000. Keeping inflation in mind, the present value of `1 crore will depreciate over time. Hence, you should consider a 5-10% annual SIP top-up to be able to achieve your goal early. Gold may seem risk-free, but it is a risky asset from an investment point of view. Historically, there have been periods in which gold has given negative returns in double digits and has shown prolonged periods of cyclicality. This means that it has not generated any returns for investors for years at a stretch. If you are looking for a non-risky cushioning in your portfolio, investing in debt mutual funds and/or bank fixed deposits of high credit quality would be you retire at 50 with current monthly expenses of Rs 50,000, your expenses in the first year would be around Rs 53,500 per month or Rs 6.42 lakh annually. Assuming 7% annual expense growth, you'll need around Rs 1.38 crore, which means that your current corpus of Rs 2 crore will be sufficient. However, it's crucial to plan your retirement withdrawals right at the start so that you can invest in appropriate instruments and sustain your corpus. Further, ensure that you have adequate health insurance in place, an emergency fund equal to 6-12 months of your expenses, and a medical corpus to take care of out-patient a question for the experts? etwealth@
New Indian Express
34 minutes ago
- New Indian Express
Trump tariff a blow to gems, jewellery, handicraft
JAIPUR: The Trump administration's decision to impose a 25% tariff on select imports from India has sparked panic among exporters in Rajasthan, particularly those trading with the United States. With America accounting for over Rs 17,000 crore of Rajasthan's total exports worth Rs 85,000 crore, the move is expected to severely impact key sectors such as gems and jewellery, handicrafts, and textiles. The most significant impact will be likely on exports of handicrafts worth Rs 5,000 crore, gems and jewellery worth Rs 7,000-8,000 crore, and garments and textiles worth Rs 1,500 crore to the US. Until now, only textiles attracted a tariff of 5.5%. However, if a uniform 25% tariff is enforced across these categories, exporters fear losing a significant share in the American market. Gems, jewellery sector at risk Previously, this trade faced a modest 5.5% duty. Now, the 25% tariff set to come into effect from August 7 poses a serious threat. Speaking to this newspaper, Naveen Jain, Jeweller and proprietor of Lord Krishna International, said, 'Every year, Rajasthan exports gems and jewellery worth Rs 7,000–8,000 crore to the US. So far, the tariff was 5.5%. With the jump to 25% from August 7, it will be extremely challenging for Indian exporters to remain competitive.' Sanjay Kala, former president of the Jewellers Association and Managing Director of Kinu Baba Gems India Pvt Ltd, echoed the concerns. 'This 25% tariff by the US is a massive challenge for Rajasthan's gems-jewellery, handicrafts and textile sectors. Exports worth over Rs 17,000 crore will be directly affected. Our products will lose their competitive edge globally, leading to a fall in exports and risking the livelihoods of lakhs of artisans and entrepreneurs.' Kala further emphasised the need for immediate government intervention. 'This will have severe economic and social consequences. With such a steep duty in our biggest export market, losses are inevitable. The Centre must initiate strong diplomatic talks with the US and announce special relief schemes to support exporters, ensure continuity in production, and protect employment.' He added, 'We must also diversify our export strategy by tapping into other global markets. Our industry has overcome many challenges before, and with government support and collective resilience, we will navigate this as well.'
Hans India
34 minutes ago
- Hans India
CM disburses Rs 697 cr under PM-KISAN
Bhubaneswar: In a major boost to farmers' welfare, Odisha Chief Minister Mohan Charan Majhi on Saturday disbursed the 20th instalment of Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme to more than 34.85 lakh farmers across the State, releasing total assistance of Rs 697 crore. The disbursement event was held on ICAR-CIFA campus on the outskirts of Bhubaneswar and marked the State-level observance of PM-Kisan Diwas. This initiative coincided with Prime Minister Narendra Modi's nationwide rollout of the instalment from Varanasi, where Rs 21,000 crore was digitally transferred to 9.7 crore farmers across India under the scheme. Addressing a large gathering of farmers and officials, Majhi reiterated his government's commitment to agricultural growth and farmer-centric governance. 'Our government is of the people and for the people, especially for our farmers. In a short time, we have rolled out multiple initiatives for their welfare. Today, over 50 lakh farmers in Odisha are receiving Rs 4,000 annually through the CM-Kisan scheme. Combined with PM-KISAN, they now receive Rs 10,000 per year,' he said. To ensure no eligible farmer is left behind, the Chief Minister announced a State-wide saturation drive across all blocks. 'We are determined to include every eligible farmer in the scheme. The funds are being transferred directly to farmers' bank accounts to ensure complete transparency through digital means,' he added. Majhi also emphasised the importance of crop diversification and the promotion of allied sectors like fisheries and animal husbandry to enhance farmer incomes. 'We must move beyond the goal of doubling income - farmers' earnings should increase manifold. A prosperous and developed India depends on the prosperity of our farmers,' he said. The Chief Minister further highlighted the success of Odisha's Samruddha Krushak Yojana, under which farmers receive additional Rs 800 input assistance per quintal of paddy. Last year alone, the State disbursed Rs 6,000 crore to 17 lakh farmers during the Kharif season and Rs 1,600 crore to 3 lakh farmers during Rabi. The event marked a significant milestone in Odisha's mission to uplift its agricultural sector and align with the national goal of building a self-reliant, developed India as envisioned by Prime Minister Modi.
