The short-term outlook for the stock of Ashok Leyland is bearish. The stock had tumbled 6.45 per cent on Thursday. This fall marks the reversal of the uptrend that was in place since March 2020. On the charts, the 21-Day Moving Average (DMA) has crossed below the 200-DMA. This strengthens the bearish case. Strong resistance is in the ₹118-₹120 region that can cap the upside. Any intermediate bounce towards this resistance zone is likely to find fresh sellers coming into the market. Immediate support is at ₹107.65 – the 38.2 per cent Fibonacci retracement support.

The chances are high for the stock to break below this support and fall to ₹102 initially and then to ₹98. Traders can go short at current levels and accumulate on a rise at ₹116. Stop-loss can be kept at ₹121. Trail the stop-loss down to ₹108 as soon as the stock falls to ₹105. Move the stop-loss further down to ₹106 as soon as the stock touches ₹101. Book profits at ₹99. The stock will have to rise past ₹120 decisively to ease the downside pressure and turn the sentiment positive. But that looks less likely as seen from the price action on the charts.

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

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