Chart Focus . Trading pick of the week: Sell Kansai Nerolac Paints

Investors with a medium-term perspective can sell the stock of Kansai Nerolac Paints at current levels.

The stock had encountered a key resistance in the band between ₹400 and ₹420 in late April after a corrective short-term uptrend.

Subsequently, it changed direction and resumed the intermediate-term downtrend that has been in place since recording a 52-week high at ₹573 in November 2019. The medium-term trend is also down for the stock.

However, after registering a 52-week low at ₹296 in late March, the stock started to trend upwards, and had been in a corrective uptrend until it met with a significant long-term resistance in the ₹400-420 zone recently.

The 50-day moving average poised in this band also had capped the rally.

Thereafter, the stock resumed the downtrend, and plummeted 13 per cent with good volumes in the past week. On Friday, the stock slumped 3.6 per cent with above-average volume, decisively breaching it 21-day moving average. The stock trades well below the 21- and 50-day moving averages.

The daily relative strength index (RSI) has entered the bearish zone from the neutral region. After testing the 40-level, the weekly RSI has resumed into the bearish zone. Both the daily as well as the weekly price rate of change indicators are featuring in the negative terrain, implying selling interest.

Overall, the medium-term outlook is bearish.

The stock has the potential to trend downwards and reach the price targets of ₹338 and ₹315 in the ensuing trading sessions. Traders with a medium-term view can sell with a stop-loss at ₹382.

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