We recommend a sell in the stock of Voltas from a short-term perspective. It is evident from the charts of the stock that after encountering long-term resistance at Rs 260 in early November 2010, the stock's uptrend came to an end and it changed direction. This reversal was triggered by negative divergence displayed in the weekly relative strength index. Since then, the stock has been on medium-term downtrend. While trending down, the stock breached its 21- and 50-day moving averages and a key support at Rs 230 in December.
Last friday, the stock tumbled 5.8 per cent with heavy volumes penetrating its 200-day moving average. Subsequently, the stock plunged further breaching an important support level at Rs 200. Both daily and weekly relative strength indices are featuring in the bearish zone. Daily moving average convergence divergence indicator is featuring in the negative territory and has signalled a sell. The weekly MACD is on the verge of entering the negative territory implying downward momentum.
Both daily and weekly price rate of change indicators are hovering in the negative zone indicating selling interest. We are bearish on the stock from a short-term perspective. We anticipate its decline to continue until it reaches our price target of Rs 181 or Rs 177 in the upcoming sessions. Short-term traders can consider selling the stock with stop-loss at Rs 190.