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We recommend a sell in CESC at current market price. From the chart of CESC we see that the stock had been on a steady long-term uptrend from June 2007 low of Rs 340 till it touched an all time high of Rs 715 in early January 2008. The stock has been on a short-term downtrend since then. On January 18, the stock conclusively penetrated the long-term up trendline as well as the 50-day moving average line, by tumbling 7 per cent. With this steep decline, the daily momentum i ndicator has entered the bearish zone.

We also note that the weekly momentum indicator is displaying bearish divergence and has entered the neutral region for the bullish zone. The daily moving average convergence divergence lines are likely to enter the negative territory, indicating bearishness. On the upside, the immediate resistance for the stock is at Rs 650 and the subsequent resistance is at Rs 700 levels. The short-term investors can book profit or sell the stock while keeping the stop-loss at Rs 625 level. Taking the above arguments in to account, we expect the stock to decline further in the short-term to the immediate support level of Rs 500.

Yoganand D.

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