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The stock of HDFC Asset Management Company (AMC), after being blocked by the resistance at ₹3,350 in September, turned the direction southward. Since then, it has been falling and towards the end of October, the scrip breached an important support at ₹2,750 which accelerated the downtrend. Moreover, last week, it slipped below another base of ₹2,440 and thus, the near-term outlook is clearly bearish.
The bearish stance is corroborated by the RSI and the MACD on the daily chart, which lies in their respective negative territory. While the nearest support can be seen at ₹2,235, it is a minor one and is less likely to arrest the decline. Eventually, the stock can be expected to depreciate to ₹2,070.
Hence, traders can short the stock now and on a rise to ₹2,440 as there are chances for the stock to pullback and retest the ₹2,440 level. Place initial stop-loss at ₹2,550. When the stock slips below ₹2,235, revise the stop-loss to ₹2,400. Exit the shorts when price declines to ₹2,070.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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