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We recommend a sell in the stock of CESC from a short-term perspective. It is apparent from the charts of the stock that after encountering resistance in September 2010, it peaked out at Rs 432. Since then, the stock has been on an intermediate-term downtrend, forming lower peaks and lower troughs. Moreover, the stock failed to breach its significant resistance at Rs 325 in March 2011 and again in April and resumed its downtrend.
On Thursday, it plunged four per cent, emphatically breaking through its key long-term support at Rs 296. The short-term trend is also down for the stock as it is trading well below its 21- and 50-day moving averages. The daily relative strength index is featuring in the bearish zone and weekly RSI has re-entered into the bearish zone from the neutral region. Daily moving average convergence divergence indicator has re-entered the negative territory and weekly MACD continues to feature in the negative territory implying downward momentum. Both daily as well as weekly price rate of change indicators are hovering in the negative terrain signalling selling interest.
Our short-term outlook is bearish on the stock. We expect its decline to prolong until it reaches our price target of Rs 278 or Rs 269 in the approaching trading sessions. Traders with short-term perspective can sell the stock with stop-loss at Rs 295.5 levels.
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