Biocon

We recommend a ‘sell’ in Biocon for a short-term trading perspective. It is visible from the charts of Biocon that after finding support at its 52-week low of Rs 86 in late November 2008, it began to move up. This up move continued till the stock encountered resistance at around Rs 130 in early January. The stock reversed lower resuming its long-term downtrend. During this decline Biocon breached its 21 and 50-day moving averages and started loosing momentum. On January 27, the stock tumbled 7 per cent, reinforcing the bearish trend. A short-term downtrend is in force since early January. Both the daily and weekly relative strength index (RSI) are featuring in the bearish zone. The daily moving average convergence and divergence (MACD) indicator has entered in to the negative territory. Our short-term outlook is bearish for the stock. We expect it to decline further until it hits our price target of Rs 90. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 105.