United Spirits - SELL

We recommend a sell in United Spirits from a short-term perspective. From the charts of United Spirits, we observe that after recording a life high of Rs 2,188 in October 2007, the stock has been on a long-term downtrend. Since then, the stock has been shaping lower peaks and lower bottoms. The downtrend accelerated in the early part of October and it plummeted sharply. The stock has recently penetrated the support level of Rs 1,000, accompanied with heavy volume. Moreover, on October 15, the stock tumbled 6 per cent, reinforcing the selling pressure. The stock is trading well below its 21- and 50-day moving averages. The daily and weekly relative strength indices are featuring in the bearish zone. The daily moving average convergence and divergence is also hovering over the negative territory. Our short-term forecast for the stock is bearish. We expect the stock’s decline to prolong further until it hits our price target of Rs 690 in the approaching trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 805.