The outlook for the stock of Firstsource Solutions is bearish. The stock has been in a strong downtrend since July last year. The fall in the last couple of days has dragged the stock well below a key intermediate support level of ₹140. The stock is now poised just above the 50 per cent Fibonacci retracement support level of ₹131.65.
However, the chances are high for it to break below ₹131.65 and see a fall to ₹125 – an important trendline support in the near-term. An intermediate bounce from ₹125 towards ₹135-₹140 cannot be ruled out. But the upside is likely to be capped at ₹140 and the trend will continue to remain down.
As such the stock is more likely to break below ₹125 and see an extended fall to ₹105 – the 61.8 per cent Fibonacci retracement support in the coming weeks. Traders can go short now and also accumulate shorts on a rise at ₹138. Stop-loss can be kept at ₹146. Trail the stop-loss down to ₹129 as soon as the stock falls to ₹126. Move the stop-loss further down to ₹123 as soon as the stock touches ₹119. Exit the short positions at ₹114.
(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)