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We are bearish on the stock of DLF and recommend a sell from a short-term perspective. It is apparent from the charts that after encountering resistance at around Rs 287 in March, the stock reversed direction triggered by negative divergence. Since then, it has been on a medium-term downtrend. In late May, the stock decisively breached its 200-day moving average and key support at Rs 220. It continued its downtrend and short-term trend is also down. The stock is trading well below its 50- and 200-day moving averages. By moving sideways, the stock formed a descending triangle pattern with base line at around Rs 164.
On Tuesday, it emphatically broke out of this pattern by tumbling 6 per cent accompanied by above average volume. The daily relative strength index has entered the bearish zone from the neutral region and weekly RSI is featuring in the bearish zone. Both daily and weekly moving average convergence divergence indicators are featuring in the negative territory.
We expect the stock’s downtrend to continue and reach our price target of Rs 152 or Rs 149 in the approaching trading sessions. Traders with short-term perspective can sell the stock with stop-loss at Rs 162 level.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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