Cipla

We recommend a sell in Cipla from a short-term perspective. It is evident from the charts that the stock has been on an intermediate-term uptrend since October low of Rs 146. This uptrend accelerated in June 2009 and the stock was on medium-term uptrend till the August high of Rs 295. However, encountering significant long-term resistance around Rs 290, the stock changed its trend. This reversal is also supported by the negative divergence in the daily moving average convergence and divergence indicator. On August 17, the stock plunged almost 6 per cent penetrating the medium-term up trendline, accompanied with good volume. Subsequently, it breached its 50-day moving average and is trading well below this average. The daily relative strength index (RSI) has entered into the bearish zone and the weekly RSI has entered into the neutral region from the bullish zone. Our short-term outlook is bearish on the stock. We expect the stock to trend southward until it hits our price target of Rs 232 in the approaching trading sessions. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 271.

via BL