Nagaraj Shetti of HDFC Securities recommends selling these two stocks today

LIC Housing Finance stock price has been in a down trend as per the bearish pattern like lower tops and bottoms over the last two months

Technical Observation: Nifty

 

The downside momentum continued for the fifth consecutive sessions on Tuesday and Nifty closed the day with a steep decline of 309 points. After opening with a negative note, the market continued to decline further for the better part of the session. Sharp intraday weakness triggered in the mid part of the session and Nifty finally closed near the lows.

 

A long bear candle was formed on the daily chart that has decisively broken the crucial support of 23400 levels and closed lower. Technically this pattern indicates prevalence of strong downside momentum in the market. The bullish chart pattern formed after the recent upside bounce has been negated and the sentiment has been changed to sharply negative.  READ: STOCK MARKET LIVE TODAY

 

 

The larger degree bearish pattern like lower tops and bottoms is visible on the daily chart and the Nifty is now sliding down to form a new lower bottom below the swing low of January at 22786 levels. However, any upside bounce from here could find strong resistance around 23200 levels.

 

Stock Picks

 

Sell LIC Housing Finance - (CMP Rs 542.55)

 

The stock price has been in a down trend as per the bearish pattern like lower tops and bottoms over the last two months. After forming a new lower top recently around Rs 600 levels, the stock price has slipped into sharp decline so far this week. The stock price has moved below the support of previous swing lows at Rs 555 this week and is trading lower.

 

Volume has started to expand during downside breakout in the stock price and daily RSI shows negative indication Selling can be initiated in LIC Housing Finance at CMP (Rs 542.55), add more on rise up to Rs 550, wait for the downside target of Rs 505 in the next 2-3 weeks. Place a stop loss of Rs 570.

 

Sell Exide Industries (CMP Rs 363.70)

 

The recent pullback rally in this auto ancillary stock seems to have reversed down recently. The stock price has reacted down from the hurdle of daily 10/20 period EMA. We observe negative chart patterns like lower tops and bottoms on the daily chart. The RSI pattern is also indicating negative bias for the stock price ahead.

 

One may look to Sell Exide Industries at CMP (Rs 363.70), add more on rise up to Rs 370 and wait for the downside target of Rs 335 in the next 2-3 weeks. Place a stop loss of Rs 382.

  Disclaimer: Nagaraj Shetti is a senior technical research analyst at HDFC Securities. Views expressed are his own.