The occurrence of “Bearish Engulfing” candle after attaining intra-day life highs post small exhaustive bodies in previous trading sessions suggests the rally might have pause/terminate in short term. Prevailing negative divergence relative to price for daily relative strength index (RSI) oscillator along with deteriorating market breadth suggests short term top might be in place and confirmed once index breaches below 11,520 levels. A move below 11,520 from here on could mark the commencement of a corrective /consolidative move towards 11,300. Positional traders should book profits while short term traders are advised to initiate short positions once 11,520 is decisively breached on the downside for 11,300 in coming weeks
Stock: Exide Industries
CMP: Rs 209.80
The stock is moving lower post dead cat bounce witnessed from 52-week lows around Rs 194 levels. The occurrence of a strong bearish candle along with Daily RSI approaching 30 levels indicates the stock is on a trajectory for a retesting its 52-week low around Rs 194. The ongoing down wave that commenced from Rs 234 levels has unfinished target of Rs 201 levels on the downside. Sustained call writing at Rs 215 and Rs 220 levels indicate upside capped in case of any relief rally is witnessed. On a weekly scale, the stock was unable to surpass its 100-EMA for two consecutive weeks and the follow through move on the downside support the overall negative setup. Traders can short the stock with a stop placed above Rs 215 for Rs 201 and Rs 194 to be obtained in coming weeks.
Stock: Tata Steel
CMP: Rs 534.25
The occurrence of “Gravestone Doji” at higher levels post “Inverted Hammer” in previous trading session suggests exhaustion for the ongoing up-move that commenced from January lows around Rs 440 levels. Prevailing bearish divergence for RSI oscillator in 240 minutes scale relative to price indicates prices are losing momentum at higher levels. The stock is expected to drift lower till Rs 511 price confluence support zone prior resumption of the uptrend in the short term. The stock can be sold with stop placed above Rs 545 for Rs 511 to be obtained in coming weeks.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.