We recommend a sell in the stock of Power Finance Corporation from a short-term perspective.

It is evident from the charts of the stock that following a medium-term uptrend, the stock encountered significant long-term resistance in the band between Rs 220 and Rs 225 in early February 2013. Subsequently, the stock changed direction triggered by negative divergence in the daily moving average convergence divergence indicator.

Since this February peak, the stock has been on a medium-term downtrend. The stock encountered another key resistance at Rs 205 in late May and resumed its medium-term downtrend. On Friday, the stock tumbled 4 per cent with above average volume breaching its important support at Rs 190 level. Moreover, this decline has emphatically breached the stock's moving average compression (21, 50 and 200-day moving average) at around Rs 193. The daily relative strength index has entered the bearish zone from the neutral region and the weekly RSI is hovering in the neutral region. The daily MACD has signalled a sell and is moving downwards in line with the stock price implying downward momentum. Further, daily price rate of change indicator is featuring in the negative terrain indicating selling interest. Our short-term outlook on the stock is bearish. We anticipate its downtrend to continue and reach our price target of Rs 175.2 or Rs 172 in the ensuing trading sessions. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 186.5 level.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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