Aptech has declined about 23 per cent from the high of ₹89.45 recorded on January 16. However, this sharp fall is now halting at the 200-day moving average, which is positioned at ₹65.8.

The stock rebounded from just above this 200-day moving average after recording a low of ₹66.15 on Tuesday. Since the stock has fallen so sharply in a short span of time, there is a high probability of a corrective rally.

Both the Sensex and the Nifty had recovered well from their respective intraday lows on Tuesday, signalling the possibility of a short-covering driven rally in the days to come. This could strengthen the case for the Aptech stock to sustain above its 200-day moving average in the next few trading sessions.

There is no immediate downside threat to the stock as long as it trades above the 200-day moving average. Traders with a short-term perspective can go long with a stop-loss at ₹66.7 for a target of ₹71.5. Immediate support is at ₹67.5. The 200-day moving average at ₹65.8 is the next key support.

The overall downtrend will resume only if the stock declines below its 200-day moving average support.

(This article was published on February 4, 2014)
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