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We recommend a sell in the stock of Indiabulls Financial Services from a short-term perspective. It is apparent from the charts of the stock that following a medium-term uptrend from its November 2011 low at Rs 116, the stock encountered resistance in the band between Rs 250 and Rs 256 in March. After frequently testing of this resistance band, the stock reversed downwards last week triggered by negative divergence in the daily relative strength index and daily price rate of change indicator.
On Wednesday, the stock tumbled four per cent breaching its 50-day moving average and medium-term uptrend line. The stock is trading well below its 21- and 50-day moving averages. For this week so far, the stock has plunged eight per cent. The daily RSI has entered into the bearish zone from the neutral region and weekly RSI is declining in the neutral region. Moreover, weekly moving average convergence divergence indicator is displaying negative divergence backing the stock's trend reversal. Both daily and weekly price rate of change indicators are featuring in the negative territory implying selling pressure. We are bearish on the stock from a short-term perceptive. We expect the stock's fall to continue and knock our price target of Rs 212.5 or Rs 206 in the forthcoming trading sessions. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 226.
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