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We recommend a sell in the stock of Biocon from a short-term perspective. It is evident from the charts of the stock that since touching its all-time high of Rs 464 in October 2010, it has been on an intermediate-term downtrend. After encountering resistance at around Rs 385 in late April, it resumed its downward move. Since then, it has been on a medium-term downtrend as well.
Last week, the stock failed to surpass its 200-day moving average around Rs 370. Reinforcing the downtrend, the stock dived 4.6 per cent, breaching its 50- and 21-day moving averages on Monday. The daily relative strength index is on the brink of entering into the bearish zone and weekly RSI is declining in the neutral region towards the bearish zone. Daily moving average convergence divergence indicator has signalled a sell and weekly MACD is featuring in the negative territory implying downward momentum.
Both daily and weekly price rate of change indicators are hovering in the negative terrain indicating selling interest. We are bearish on the stock from a short-term perspective. We expect its decline to prolong until it reaches our price target of Rs 330 or Rs 320 in the days ahead. Traders can sell the stock while maintaining stop-loss at Rs 351 levels.
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