Adani Transmission (₹757.9): Sell

Investors with a short-term perspective can sell the stock of Adani Transmission at current levels. Since the stock took support at ₹234 in September 2020, it has been in an intermediate-term uptrend. In January this year, the stock took support in the ₹390-₹400 band and continued to trend upwards. The stock rallied sharply in mid-February, surpassing key hurdles at ₹600 and ₹700. However, after registering a new high at ₹854 in early March the stock started to decline. Triggered by negative divergence in the daily relative strength index and the stock appear to have reversed direction recently.

On Tuesday, the stock tumbled 4.4 per cent with good volume breaching a key support at ₹800. The daily RSI is displaying negative divergence and is likely to enter the neutral region from the bullish zone. Moreover, the weekly RSI is also displaying negative divergence implying short to medium-term trend reversal is possible and the indicator is slopping downwards from the overbought territory.

Taking a contrarian view, the short-term outlook is bearish for the stock. It has potential to extend the down-move and reach the price targets of ₹725 and ₹710 in the coming trading sessions. Traders can sell the stock with a fixed stop-loss at ₹775.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)