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The stock of Cochin Shipyard is in a long-term downtrend. Although it rallied between June 2020 and June 2021, wherein the price appreciated from about ₹225 to ₹430, it was not a trend reversal but a corrective rally. The scrip resumed downtrend in Jun 2021 and last week, it closed below the support at ₹300.
The price action hints at more downside in the forthcoming sessions. But before the next leg of downtrend, the stock could pull back to ₹305. On the downside, the nearest support can be spotted at ₹260 with the subsequent one at ₹240. The relative strength index and the moving average convergence divergence on the weekly chart are showing bearish signs.
Given the above factors, traders can be bearish and consider initiating fresh short positions at current level of ₹290. Add more shorts when price rally to ₹305. Initial stop-loss can be placed at ₹320. When the price decline to ₹260, revise the stop-loss down to ₹280. Exit all the short positions when the stock touches ₹240.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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