Chart Check: 40% fall from Sept 2021 highs, traders can go short in this telecom stock; here’s why
The telecom infrastructure stock witnessed selling pressure after it hit a high of Rs 332 on 28 September 2021. The stock closed at Rs 193 on 23 September 2022 which translates into a downside of nearly 42 per cent.
The stock has been making a lower high and lower low structure since then. It tried to take support above Rs 220-230 levels but that support was also broken in February 2022.
The stock was trading in a narrow range of 10 points since 10 August 2022 but it finally gave a breakdown from the range on 19 September.
The recent price action suggests that weakness is likely to continue in the near term, and traders can go short for the target of Rs 182 which is closer to its 52-week low of Rs 181, suggest experts.
The stock is trading below all its crucial short- and long-term moving averages such as 5,10,30,50,100 and 200-DMA which is a negative sign.
The relative strength index (RSI) is at 33.1. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is below its signal and center line, this is a strong bearish indicator.
The stock has remained an underperformer viz-a-viz to its peers and the broader market. On a higher time frame, stock is under lower high and lower low sequence indicative bearish structure.
“After a couple of week’s relief rallies, the stock has witnessed selling pressure from mid-term falling moving average. Stock has breached the rising channel, which confirms a bearish continuation sign,” Kapil Shah, Technical Analyst, Emkay Global Financial Services and Trainer- FinLearn Academy, said.
“From the oscillator perspective, MACD gave a negative crossover in the negative zone. Price structure and oscillator harping on the same string,” he said.
“Based on the aforementioned rationale, the stock is a short candidate at a CMP of Rs 195 with a stop loss of Rs 202 and downside potential at Rs 182. duration can be of 1 month,” recommends Shah.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
