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We recommend a sell in the stock of Aurobindo Pharma from a short-term perspective. It is seen from the charts of the stock that following a medium-term uptrend from its March low of Rs 127, the stock encountered significant long-term resistance at Rs 200 in early May. Subsequently, the stock changed direction triggered by negative divergence in daily price rate of change indicator and started to decline. Since then, the stock has been on a near-term downtrend.
On Tuesday, the stock tumbled almost 5 per cent with above average volume breaching its key support around Rs 183.5. With this decline the stock’s near-term downtrend is strengthening. The daily and weekly relative strength index are slopping downwards implying that the uptrend is losing its strength. The daily moving average convergence divergence indicator has signalled a sell and is moving lower in line with the stock price.
We are bearish on the stock from a short-term perspective. We expect its decline to continue and reach our price target of Rs 173.5 or Rs 170 in the approaching trading sessions. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 184.5 level.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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