We recommend a sell in the stock of Aurobindo Pharma from a short-term perspective. It is evident from the charts of the stock that after encountering resistance at around Rs 200 in early January this year, the stock changed its direction triggered by negative divergence in the daily and weekly relative strength index. Since then, the stock has been on a medium-term downtrend. While trending down, the stock decisively breached its key support at Rs 177 in late February. Thereafter, the stock emphatically breached another important long-term support at around Rs 160 by tumbling 13 per cent in the previous week. The stock is trading well below its 50 as well as 200-day moving averages. The daily RSI is featuring in the bearish zone and the weekly RSI has entered the bearish zone from the neutral region. Both the daily and weekly price rate of change indicators are hovering in the negative terrain implying selling pressure. Our short-term outlook on the stock is bearish. We anticipate its downtrend to continue and reach our price target of Rs 134 or Rs 131 in the forthcoming trading sessions. Traders with a short-term perspective can consider selling the stock with stop-loss at Rs 142.5.
Aurobindo Pharma (Rs 139.7): SELL
March 24, 2013:
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