We recommend a sell in the stock of India Cements from a short-term perspective. It is evident from the charts of the stock that it has been on a medium-term downtrend from its March peak of Rs 118. Following a corrective up move, the stock encountered resistance in the band between Rs 90 and Rs 93 in July and August this year. This resistance coincides with 38.2 per cent Fibonacci retracement level of the prior downtrend.
Triggered by negative divergence in daily moving average convergence divergence indicator, the stock continued to decline. On Wednesday, the stock fell by 4.5 per cent, breaching its short-term uptrendline as well as moving average compression (21-, 50-, 200-day moving average) around Rs 84.
The daily MACD has signalled a sell and is likely to enter negative territory implying downward momentum. Both daily and weekly price rate of change indicators are featuring in the negative terrain indicating 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 78.5 or Rs 76 in the forthcoming trading sessions. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 83.5.