We recommend you sell the stock of Max India from a short-term perspective. It is seen from the charts of the stock that it was on an intermediate-term uptrend between late February and September 2011, from Rs 137 to Rs 214. However, encountering significant long-term resistance in the band between Rs 215 and Rs 220 in September, the stock changed its trend, triggered by negative divergence in daily relative strength index. Since then, the stock has been on a medium-term downtrend. After encountering key medium-term resistance in late October at around Rs 190, the stock resumed its downtrend. On Tuesday, the stock fell 3 per cent accompanied by above average volumes, breaching its 21-day moving average.

It is trading well below its 21- and 50-day moving averages. Both daily as well as weekly RSI are slipping in the neutral region towards the bearish zone. Daily moving average convergence divergence indicator is hovering in the negative territory and has signalled a sell. The daily and weekly price rate of change indicators are featuring in the negative area, implying selling interest. Our short-term outlook on the stock is bearish. We expect its decline to continue and reach our price target of Rs 171 or Rs 165.5 in the forthcoming trading sessions. Traders with short-term horizon can consider selling the stock while maintaining stop-loss at Rs 182.

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