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The bias on the charts for the stock of Shriram Transport Finance is turning bearish. There is a head and shoulder pattern visible on the daily chart. The stock has just closed on Tuesday at the neckline support of this pattern poised at ₹1,385. The stock has tumbled about 8 per cent in the first two trading days of this week. The chances are high for the sell-off in this stock to internsify in the coming days. Though there is an intermediate support ₹1,360, the stock is more likely to break below it. Such a break can drag the stock down ₹1,200 in the coming weeks.
Traders can go short at current levels. Stop-loss can be placed at ₹1,490. Trail the stop-loss down to ₹1,360 as soon as the stock moves down to ₹1,290. Move the stop-loss further lower to ₹1,280 as soon as the stock falls to ₹1,240. Book profits at ₹1,210.
In case if the stock manages to sustain above ₹1,360, an intermediate bounce to ₹1,450-₹1,470 cannot be ruled out. But such a rise is likely to find fresh sellers at higher levels and the upside is likely to be capped.
(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)
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