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AU Small Finance Bank (₹1,371.7)
At range top
Since April 2021, the stock of AU Small Finance Bank has been charting a broad sideways trend between ₹930 and ₹1,400. Last week, the stock made a high of ₹1,465 but then declined below ₹1,400. It has thus formed an inverted hammer candlestick pattern, hinting at a decline. As it is trading near the range top, the likelihood of a fall from here looks high. Within the broad range, the stock can find support at ₹1,240 and ₹1,100.
We expect the stock to gradually depreciate to these levels in a month or two. So, traders can initiate fresh short positions at current levels with initial stop-loss at ₹1,480. When price drops to ₹1,240, exit 25 per cent of your positions. At ₹1,180, exit 50 per cent of the shorts and tighten stop-loss to ₹1,335. Exit the remaining at ₹1,125.
L&T Technology Services (₹4,101.4)
Makes lower low
The stock of L&T Technology Services has fallen over the last three consecutive weeks. It closed at ₹4,101.4 last week. With that, it has formed a lower low on the daily chart and has slid below the 50-day moving average support. Thus, the outlook is clearly bearish.
The scrip is likely to fall towards the nearest support at ₹3,480, which is the 50 per cent Fibonacci retracement level of the prior rally. This is likely to occur in a couple of months. But before that, the stock could see a corrective rally to ₹4,440. Therefore, traders can short now and on a rise to ₹4,440. So the average entry price will be around ₹4,270. Place the stop-loss at ₹4,600. When the stock falls below ₹3,750 alter stop-loss to ₹4,100. Liquidate all your shorts when price declines to ₹3,480.
Tech Mahindra (₹1,306.5)
Breaches a key support
The stock of Tech Mahindra is on a steady downtrend since the beginning of this year. Extending the fall, it breached a key support at ₹1,375 and a rising trendline support last week. Also, the price action on the daily chart has some resemblance to a confirmed head and shoulder pattern, showing a bearish reversal. So, the stock will most likely decline more in the coming weeks.
The nearest support is the price band of ₹1,110-1155. But before that, the stock could retest the support-turned-resistance level of ₹1,375. So, traders can initiate shorts worth 80 per cent of the total planned amount now and short for the remaining on a rally to ₹1,375. Place the stop-loss at ₹1,460. When the price falls below ₹1,200, tighten the stop-loss to ₹1,300. Liquidate all the shorts when the stock touches ₹1,155.
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