Makes lower low
The stock of Atul Ltd, which has largely been trading with a bearish bias since the beginning of 2022, breached a key support of ₹7,800 last week. It even marked a fresh 52-week low of ₹7,350.5 on Friday. The likelihood of the fall extending further is high where the bears could potentially drag the price of the stock to ₹6,750 in a couple of months. That said, there is a chance that the stock could test ₹7,750 once before traveling further south.
Hence, one can initiate fresh short positions now and add more shorts if the price rises to ₹7,750. Place stop-loss at ₹8,000 at first and revise it to ₹7,300 when the stock slips below ₹7,000. When the price touches ₹6,850, exit three-fourth of the shorts and alter the stop-loss to ₹7,050 for the remaining shorts. Exit the leftover positions at ₹6,750.
Deepak Nitrite (₹1,887.55)
Set to depreciate
The recent leg of fall in the stock of Deepak Nitrite began in November last year after it faced a resistance at ₹2,325. While the downward momentum appeared to have lost momentum over the past three weeks, the sharp decline on Friday has brought back the bears into the picture. Going forward, we anticipate the bears to dominate where the price is likely to fall towards ₹1,715.
That said, there is a good chance for the stock to see a corrective rally to ₹1,985 from here. So, sell the stock now and add more shorts when price rallies to ₹1,985. Place initial stop-loss at ₹2,050. Alter it to ₹1,900 when price drops to ₹1,800. Thereafter, when the stock touches ₹1,750, exit two-third of the shorts that you hold. Modify the stop-loss to ₹1,800 for the remaining positions. Liquidate them at ₹1,715.
LIC Housing Finance (₹389.5)
Bears to gain traction
The stock of LIC Housing Finance has begun 2023 on the back foot as it has been on a decline for the past three weeks. Last week, it fell below an important support at ₹395 and this makes the field favourable for the bears. In the near term, the bears are expected to gain traction and pull the stock down to the nearest notable support at ₹370.
Given the prevailing price action, participants can consider going short on the stock of LIC Housing Finance at the current level of about ₹390. Place stop-loss at ₹400. When the stock touches ₹380, shift the stop-loss down to ₹392. Thereafter, as and when the price declines, move the stop-loss lower with the interval equal to one daily ATR (Average True Range) level. Note that this adjustment should only be made to the downside. Book profits at ₹370.