We recommend a sell in the stock of Tata Chemicals from a short-term perspective. It is evident from the charts of the stock that since encountering resistance at around Rs 380 in January, it has been on an intermediate-term downtrend. Medium-term trend has been down for the stock from its early May peak of Rs 333. In late May, the stock decisively breached its key support at Rs 310 and continued to decline. After testing key resistance at Rs 285 over the past two weeks, the stock failed to surpass it.
On Thursday, it fell 2.8 per cent accompanied by above average volume, breaching its 21-day moving average and resumed its medium-term downtrend. The stock is trading well below its 50- and 200-day moving averages. The daily relative strength index has entered the bearish zone from the neutral region and weekly RSI is featuring in the bearish zone. Both daily and weekly moving average convergence divergence indicators are hovering in the negative territory. Likewise, daily as well as weekly price rate of change indicators are featuring in the negative terrain implying selling interest.
We are bearish on the stock from a short-term perspective. We anticipate its downtrend to continue and reach our price target of Rs 263 or Rs 258 in the ensuing trading sessions. Traders with short-term perspective can sell it with stop-loss at Rs 280.5 level.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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