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We recommend a sell in the stock of Petronet LNG from a short-term perspective. It is apparent from the charts of the stock that after encountering long-term resistance in early November 2012 in the band between Rs 175 and Rs 180, the stock changed direction. This reversal was triggered by negative divergence in daily moving average convergence divergence indicator and the key resistance band. Since then, the stock has been in an intermediate-term downtrend, forming lower peaks and troughs.
Last week, the stock resumed its downtrend after encountering resistance at Rs 155. On Tuesday, the stock tumbled 3.8 per cent accompanied by above-average volumes, breaching its significant support at Rs 143. The stock is hovering well below its 50- and 200-day moving average. The daily relative strength index is featuring in the bearish zone and weekly RSI has entered this zone from the neutral region.
Both daily and weekly MACD are hovering in the negative territory implying bearish momentum. We are bearish on the stock from a short-term perspective. We expect its decline to continue and reach our price target of Rs 137 or Rs 134.5 in the ensuing trading sessions. Traders with a short-term perspective can consider selling the stock with stop-loss at Rs 143.4 levels.
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