We recommend a sell in the stock of Indiabulls Real Estate from a short-term perspective. It is evident from the charts of the stock that from its September 2012 low of Rs 41.7, the stock has been in a medium-term uptrend. However, last week, the stock encountered resistance at around Rs 81.
Earlier, in February 2012, the stock had peaked out at this level and started loosing its bullish momentum. The stock fell 4.5 per cent on Tuesday, breaching its medium-term uptrend-line. The daily moving average convergence divergence indicator is displaying negative divergence indicating trend reversal. Moreover, the weekly relative strength index is displaying negative divergence signalling a potential trend reversal in the stock. The daily RSI is inching lower in the neutral region and weekly RSI is on the brink of entering the neutral region from the bullish zone.
As the stock is reversing down from a significant long-term resistance, and has breached the medium-term uptrend-line, we are bearish on the stock. We anticipate its decline to prolong and reach our price target of Rs 73.2 or Rs 71.6 in the approaching trading sessions. Traders with a short-term perspective can consider selling the stock with stop-loss at Rs 78 levels.
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