Forms lower lows
The stock of Birlasoft, by breaching an important support at ₹400 in May, turned the outlook bearish. The price action hints at further depreciation from the current level of ₹309.6. While ₹275 can offer some support, the stock is expected to slip below this level and touch ₹225 before this year end. But there is a slim chance that the stock might see a corrective rally to ₹340 before it falls below the support at ₹275.
So, traders can initiate shorts worth 75 per cent of the total intended amount at the current level and add shorts for remaining 25 per cent if there is a rally to ₹340. Thus the average short price would be ₹317. Keep initial stop-loss at ₹365 and alter this to ₹310 if price falls below ₹275. Exit all the shorts at ₹225.
Divi’s Laboratories (₹3,727.75)
The stock of Divi’s Laboratories is on a decline since October last year. Towards the end of May this year, it confirmed a bearish flag pattern. According to this pattern, the price can fall to ₹2,700. But note that there could be a corrective rally and we forecast the stock to resume the downtrend either from ₹3,930 or ₹4,115.
Therefore, traders can short worth 40 per cent of intended amount now, 40 per cent on a rally to ₹3,930 and the balance 20 per cent at ₹4,115. The average shorting price would thus be ₹3,887. Place initial stop-loss at ₹4,300. On a fall to ₹3,400, tighten the stop-loss to ₹3,900. When the scrip falls to ₹3,050, exit 60 per cent of the total short positions and then revise the stop-loss to ₹3,400 for the balance. Book the leftover shorts at ₹2,700.
Tube Investments of India (₹1,999.3)
Hits record high
The uptrend since March 2020 low in the stock of Tube Investments of India lost momentum in November last year. Since then, it was charting a sideways trend — it was moving in the range of ₹1,460 and ₹1,870. But before a couple of weeks, the stock broke out of the range, opening the door for another leg of rally. Yet, from here, it might see a moderation to ₹1,780 before extending the rally.
On the upside, the stock has the potential to rally to ₹2,280 and then possibly to ₹2,375 before the end of this year. Considering the above, one can buy now at ₹1,999 and accumulate if price drops to ₹1,780. Place stop-loss at ₹1,640. When price touches ₹2,280 exit three-fourth of your holdings and tighten the stop-loss to ₹2,140 for the rest. Liquidate the remaining at ₹2,375.