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We recommend a sell in the stock of Educomp Solutions from a short-term perspective. It is seen from the charts of the stock that ever since peaking out in October 2009 at Rs 1,017, it has been on a long-term downtrend. Both intermediate- and medium-term trends are down. Though the stock has been on a short-term uptrend from its September 5 low of Rs 192, it is losing momentum at its significant resistance at Rs 250.
After encountering twin resistance (medium-term downtrend line and a resistance) at Rs 250, the stock tumbled almost five per cent on Tuesday. Daily volumes are declining over past two weeks. The 14-day relative strength index is sloping down in the neutral region and weekly RSI is featuring in the bearish zone.
Both daily and weekly moving average convergence divergence indicators are hovering in the bearish territory. Considering that the stock's medium-term downtrend line is in tact, we are bearish on the stock in the short-term. We expect its decline to prolong and reach our price target of Rs 229 or Rs 220 in the forthcoming trading sessions. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 241.
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