The Hindu Business Line : ITC (Rs 174.55): Sell

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.

Yoganand D.

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