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The stock of Bharat Forge has been moving down gradually since November last year. Within this downtrend, the corrective rally was in place since March this year faced resistance just above ₹750 earlier in April. After failing in a few attempts to breach ₹750 decisively, the stock has come down sharply. This keeps the overall downtrend intact. The sharp 4 per cent fall so far this week has strengthened the fall. There is room for the stock to decline further ₹630 in the next couple of weeks. A further break below ₹630 will see the fall extending towards ₹570 over the medium-term. Strong resistance is in the ₹695-₹700 region. Intermediate bounce to this resistance zone can see strong selling interest coming into the market.
Traders can go short at current levels. Add more shorts on a rise at ₹685. Keep the stop-loss at ₹702. Trail the stop-loss down to ₹665 as soon as the stock falls to ₹655. Move the stop-loss further down to ₹645 as soon as the stock touches ₹638 on the downside. Book profits at ₹633. The stock will have to rise past ₹705 decisively to ease the downside pressure. But that looks unlikely.
(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)
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