We recommend a sell in the stock of Aban Offshore from a short-term perspective. It is seen from the charts of the stock that after encountering significant intermediate-term resistance at around Rs 550 in early and late February, the stock resumed its primary downtrend. This reversal was helped by negative divergence in daily relative strength index and daily price rate of change indicator. Since then the stock has been on a short-term downtrend.
After repeatedly testing the key support at Rs 450 from late February, the stock broke through this support by tumbling seven per cent on Thursday. The stock is hovering well below its 21- and 50-day moving averages. Its daily RSI has entered into the bearish zone from the neutral region and weekly RSI is declining in the neutral region. The daily moving average convergence divergence indicator has been slopping downwards in line with the stock price from late February. This indicator has entered into the negative territory indicating downward momentum.
We are bearish on the stock from a short-term perspective. We expect its short-term downtrend to continue and touch our price target of Rs 421 or Rs 408 in the forthcoming trading sessions. Traders with short-term perspective can consider selling the stock while maintaining tight stop-loss at Rs 447.