Today's Pick -Tata Chemicals

We recommend a sell in a Tata Chemicals from a short-term perspective. It is evident from the charts that it was on a medium-term uptrend between March 2008 and May 2008 (from a low of Rs 255 to a high of Rs 440). However, the stock reversed direction and started experiencing selling pressure, after touching an all-time high of Rs 440. We notice a head and shoulders pattern (a top reversal pattern), spanning the last two months with neckline at Rs 333. On June 23, the stock breached this neckline and tumbled 6 per cent. The daily relative strength index has entered the bearish zone. The daily moving average convergence and divergence has entered the negative region too. We are bearish on the stock in the short-term. We expect the stock’s decline to prolong until it hits our price target of Rs 290 in the approaching trading sessions. Traders with short-term perspective can sell the stock while maintaining stop-loss at Rs 341.

via BL