Orchid Chem & Pharma

We recommend a sell in the stock Orchid Chemicals & Pharmaceuticals from a short-term trading perspective. It is evident from the charts of Orchid Chemicals that it was on a medium-term uptrend between March low and early June peak (from Rs 56 to Rs 142).

Triggered by the negative divergence displayed in the daily relative strength index (RSI), the counter changed its trend. Though the stock penetrated the key resistance level at Rs 120 in late May, it failed to take support from this level while declining. On June 18, the stock plummeted 5 per cent breaking through the support level Rs 120. Subsequently, the stock tumbled another 5 per cent breaching its 50-day moving average. The daily RSI has entered in to the bearish zone and the weekly RSI is declinging in the neutral region towards this zone.

The daily moving average convergence and divergence indicator had signalled a sell and is heading towards the negative territory. Moreover, the stock has resumed its long-term downtrend that began from April 2008 peak of Rs 343. Our short-term outlook is bearish on the stock. We anticipate its decline to prolong until it hits our price target of Rs 95. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 111.

via BL