Tuesday 7 October 2008

Sell ITC



CMP: Rs 174.55

We recommend a sell in ITC from a short-term horizon. The chart of ITC depicts that it has been on an intermediate-term downtrend since its May peak of Rs 232. However, in July, the stock found support at around Rs 160 and made a corrective up move to Rs 195-level (retracing 50 per cent fibonacci retracement level of its prior decline). The stock encountered significant resistance at Rs 195 and resumed its downtrend during late September. Recently, the stock penetrated 21- and 50-day moving averages by tumbling 5 per cent. Moreover, on October 7, ITC broke through the support level of Rs 180 accompanied with high volume, reinforcing the downtrend. The daily and weekly relative strength indices are featuring in the bearish zone. The daily moving average convergence and divergence has entered the negative territory. The intermediate-term down trendline is still in place. We are bearish on the stock from a short-term perspective. We anticipate the stock to decline further and find support at our price target of Rs 157 in the approaching trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 184.

Source: Hindu Business Line

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DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.