Cairn India

We recommend a sell in Cairn India stock from short-term trading perspective. It is clearly visible from the charts of Cairn India that it has been on a long-term downtrend from its May 2008 high of Rs 342 (its 52-week high).

However, the stock bounced back, after finding support at Rs 88 in late October. The stock was on a corrective medium-term up move till it encountered twin resistance around Rs 180 (a significant resistance level and the long-term down trendline).

Recently, the counter began to decline, resuming its long-term downtrend. On January 13, the stock tumbled by 7 per cent decisively penetrating its corrective medium-term up trendline. The daily relative strength index is falling in the neutral region towards the bearish zone. Moreover, the daily moving average convergence and divergence is signalling a sell.

Our short-term forecast for the stock is bearish. We expect the stock to decline further until it hits our price target of Rs 137. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 161.

via BL