We recommend a sell in the stock of NTPC from a short-term perspective. It is apparent from the chart of NTPC that the stock has been a long-term downtrend since peaking out from its December 2009 peak of Rs 241. Medium- as well as short-term trends are also down for the stock. In late July this year, the stock decisively breached its key support at key long-term base at Rs 140 and started testing next important support at Rs 130.
On Tuesday, the stock emphatically broke through this support by tumbling 5.8 per cent accompanied by above average volume. The stock is trading well below its 21- and 50-day moving averages. The daily relative strength index has re-entered in to the bearish zone from the neutral region while weekly RSI is still featuring in the bearish zone.
Further, daily as well as weekly price rate of change indicators are hovering in the negative terrain implying selling interest. Our short-term outlook on the stock is bearish. We expect its downtrend to continue and reach our price target of Rs 119.5 or Rs 117 in the ensuing trading sessions. Traders with short-term horizon can sell the stock with stop-loss at Rs 127 level.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)