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We recommend a sell in the stock of Escorts from a short-term perspective. It is evident from the charts that the stock has been on an intermediate-term downtrend since it peaked out in November 2010 marking a high of Rs 245. Following a corrective up move, the stock encountered its long-term resistance at Rs 150 in early April and started to decline. Since then, the stock has been on a short-term downtrend and it appears to have resumed its intermediate-term downtrend. On May 3, the stock tumbled seven per cent accompanied by good volume conclusively penetrating its 21- and 50-day moving averages. Further, reinforcing the bearish momentum, the stock slumped almost five per cent on Thursday and is trading well below its moving averages. Since early April, the daily moving average convergence divergence indicator has been declining. We expect it to continue its decline until it reaches our price target of Rs 122 or Rs 118. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 129.
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