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Aarti Industries (₹720.50)
Faces considerable sell-off
The stock of Aarti Industries decisively breached a support at ₹750 last week and the price action hints that bears are not done yet. Although ₹640 is a considerable support, the stock is expected to breach this level too and probably depreciate to ₹570 before the end of this year. At ₹640, there could be a pause or a minor rally to ₹680-700 before invalidating this support.
Similarly, from the current level, the stock could see an upside to ₹800. Based on the above expectation, here’s our trade suggestion. Short now at around ₹720 and add more shorts if price rallies to ₹790; the average selling price would be around ₹755. Place stop-loss at ₹825. When price drops to ₹640, revise the stop-loss to ₹710; further alter this to ₹650, when the stock touches ₹600. Exit at ₹570.
HDFC AMC (₹1,862.05)
Rally a mere pullback
The stock of HDFC Asset Management Company (AMC), after registering a 52-week low of ₹1,690 before two weeks, is on an up-move. However, this is not a bullish trend reversal, and this rally will most likely be a mere pullback. The corrective move can extend up to ₹2,020, but not beyond that. A clear break out of ₹2,100 can be the starting point of discussion about bullish reversal. Until then, the bias is bearish. So, traders can short the stock now and accumulate shorts when price moves to ₹2,020.
The average sell price would be around ₹1,940. Place stop-loss at ₹2,155. When stock falls to ₹1,560, book 50 per cent of your total positions and tighten the stop-loss to ₹1,725. When price slips below ₹1,400, tighten the stop-loss further to ₹1,520. Exit the leftover shorts at ₹1,325.
IPCA Laboratories (₹861.15)
Breaches a support zone
Although the stock of IPCA Laboratories hit an all-time high of ₹1,383.10 in September, a close look at the chart will reveal that it has largely been moving in the broad band of ₹900-1,200 since November 2020. But last week, the scrip closed at ₹861.15 — below the lower end of the range, turning the outlook bearish. Even though there is a likelihood that it could retest the ₹900-925 region from here, it is expected to eventually drop to ₹740.
Therefore, we would recommend traders to split the entry into two – short at current level of ₹861 and short again if price rallies to ₹925. The average selling price would then be around ₹892. Keep stop-loss at ₹975. But bring it down to ₹875 when the stock falls below ₹800. Liquidate all the shorts when price touches ₹740.
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