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We recommend a sell in the stock of Biocon from a short-term perspective. It is seen from the charts of the stock that since recording its all-time high of Rs 464 in October 2010, the stock has been in an intermediate-term downtrend. After encountering resistance around Rs 390 in late April, the stock started to decline. Since then, it has been on a short-term downtrend and it appears to have resumed its intermediate-term downtrend.
Reinforcing the downtrend, the stock slipped three per cent conclusively penetrating its immediate support at Rs 345 on Thursday. It is trading well below its 50- and 200-day moving averages. The daily relative strength index is featuring in the bearish zone and weekly RSI is slipping towards this zone in the neutral region. Daily moving average convergence divergence indicator is on the brink of entering into the negative territory whereas weekly indicator is hovering in the negative terrain signalling downward momentum.
From a short-term perspective we are bearish on the stock. We anticipate its decline to continue until it reaches our price target of Rs 324 or Rs 313 in the ensuing trading sessions. Short-term traders can sell the stock while maintaining stop-loss at Rs 345 levels.
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