We recommend a sell in the stock of Sesa Goa from a short-term perspective. It is apparent from the charts of the stock that it has been on an intermediate-term downtrend from its 52-week high of Rs 270 registered in mid-February. Long-term trend is also down for the stock. In early July this year, the stock resumed its downtrend after encountering resistance at Rs 207.

On Tuesday, the stock fell by 2.7 per cent breaching its moving average compression (21-, 50- and 200-day moving averages) at around Rs 188. Further, in last trading session too, the stock tumbled 5.3 per cent breaking through key support at Rs 176. This decline has reinforced the stock's intermediate-term downtrend. The daily relative strength index has entered the bearish zone and weekly RSI is on the brink of entering this zone from the neutral region. The daily moving average convergence divergence indicator signalled a sell and has re-entered the negative territory while weekly MACD is hovering in this territory. Both daily and weekly price rate of change indicators are featuring in the negative terrain implying selling interest.

We are bearish on the stock from a short-term perspective. We expect its decline to prolong and reach our price target of Rs 167.5 or Rs 162 in the forthcoming trading sessions. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 177.5.

(This article was published on August 29, 2012)
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