Investors with a short-term perspective can consider selling the stock of Idea Cellular at current levels. On Thursday, telecom shares tumbled as Reliance Jio raised the 2G auction bar. Idea Cellular nosedived 7 per cent with above average volumes. This decline has decisively breached the stock’s key moving averages as well as important support at Rs 160. Moreover, the stock has broken out of a descending triangle pattern, which acts as a top reversal pattern.

The medium-term trend has been down for the stock from its October 2013 peak of Rs 188. Indicators, such as the moving average convergence divergence and price rate of change are featuring in the negative territory, backing the downtrend. The two indicators on the weekly chart are moving downwards implying weakness in the trend. The short-term forecast is bearish for the stock. Idea Cellular can extend its decline and reach the price target of Rs 149 and then Rs 145 in the short term. Sell the stock while maintaining a stop-loss at Rs 160.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

(This article was published on January 16, 2014)
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