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The stock of GAIL India tumbled 4.5 per cent breaking a key support at ₹400 on Monday. Investors with a short-term perspective can sell the stock at current levels. Since marking a new high at ₹551 in October 2014, the stock has been on a medium-term downtrend. The short-term trend is also down now. The stock hovers well below its 50- and 200-day moving averages. The recent fall has strengthened the downtrend.
With this fall, both the daily and weekly relative strength indices have entered the bearish zone. Moreover, other indicators, such as moving average convergence divergence and price rate of change on the daily and weekly charts, are featuring in the negative territory implying downward momentum. The short-term outlook is bearish for the stock. It can extend its medium-term downtrend and reach our price target of ₹370 and then ₹362 in the upcoming sessions. Sell the stock while maintaining a stop-loss at ₹394.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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