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We recommend a sell in MTNL at current price level. It is evident from the chart that the stock has been moving sideways in a wide range between Rs 130 and Rs 170 since May 2006. In late August, MTNL took support from the lower boundary of this sideways consolidation and made a minor corrective up move. This up move has already retraced 50 per cent of its prior down move. MTNL is struggling to surpass the strong resistance at Rs 150, where the long-term average lines are positioned. The bearish crossover of these averages, coupled with sell signals in the daily momentum indicators, lend credence to the view that a down-move is in the offing in the near term.

Short-term investors can sell MTNL at current price levels with a stop at Rs 151. We expect the stock to decline to the long-term support at Rs 130 with an interim pause at Rs 138 in the short term.

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