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Essar Oil (Rs 176.80): Sell


We recommend a sell in Essar Oil from a short-term perspective. From the charts of the Essar Oil, we see that it has been on a long-term down trend from its 52-week high of Rs 360 recorded in early January 2008. On June 30, the stock conclusively broke through the key support level at Rs 200 where the 200-day moving average is positioned and tumbled 11 per cent accompanied by above average volume.

The daily relative strength index is featuring in the bearish zone and the weekly RSI is on the brink of entering this zone. The daily moving average convergence and divergence is also declining and is featuring in the negative territory, reinforcing our bearish stance.

The long-term down trendline of the stock is intact. Considering the above bearish facts we are negative on the stock in the short-term and expect its decline to prolong until it hits our price target of Rs 158 in the upcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 185.

Yoganand D.

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