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The outlook for the stock of Gujarat Gas is bearish. The stock had tumbled 13 per cent last week. The sell-off continues and the stock extended the fall by another 7 per cent on Monday. This keeps the overall trend down. Immediate support is at ₹437. In case if the stock manages to bounce from this support, a corrective bounce to ₹470-₹480 is possible. A head and shoulder reversal pattern is also visible on the weekly chart.
The neckline resistance of this pattern is around ₹470. The level of ₹480 is a strong support-turned-resistance. As such the ₹470-₹480 will be a strong resistance zone and a rise beyond ₹480 is less likely as fresh sellers are likely to emerge at higher levels. As such the stock is likely break below ₹437 eventually and fall to ₹360-₹350 in the next one-two months. Traders can go short at current levels. Accumulate shorts on a rise at ₹465. Keep the stop-loss at ₹490. Revise the stop-loss down to ₹438 as soon as the stock falls to ₹426. Move the stop-loss further down to ₹410 as soon as the stock touches ₹395 on the downside. Book profits at ₹380.
(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)
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