We recommend a sell in the stock of Essar Oil from a short-term perspective. It is evident from the charts of the stock that it has been on a short-term downtrend since encountering long-term resistance at Rs 94 in early February this year. On Monday, the stock plunged more than 11 per cent with good volume, decisively breaking though key support and medium-term uptrend-line at Rs 80 that was in place from September 2012.

The stock has also breached its 50-day moving average conclusively and is hovering well below 21- and 50-day moving averages. The daily relative strength index has entered the bearish zone from the neutral region and weekly RSI has entered the neutral region from the bullish zone. The daily moving average convergence divergence indicator is trending downwards in line with the stock price and is on the brink of entering the negative territory.

The daily price rate of change indicator is featuring in the negative area implying selling interest. We are bearish on the stock from a short-term perspective. We expect its decline to prolong and reach our price target of Rs 69.5 or Rs 68 in the approaching trading sessions. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 74.2 levels.

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