Nagarjuna Construction

We recommend a sell in the stock of Nagarjuna Construction Company from a short-term perspective. It is apparent from the charts that the stock was on an intermediate-term uptrend from its March low of Rs 34 to its July high of Rs 159 (a 52-week high). However, encountering significant resistance in the band of Rs 150 and Rs 160, the stock reversed direction. A negative divergence in the weekly relative strength index supports the stock’s reversal. Since July peak, it has been on a short-term downtrend. On August 10, the stock tumbled 6 per cent penetrating its intermediate-term uptrend-line as well as 50-day moving average. Moreover, the stock reinforced the downtrend by slipping 6 per cent on August 17. The daily RSI is on the brink of entering the bearish zone and weekly RSI has entered the neutral region from the bullish zone. We are bearish on the stock from a short-term horizon. We expect it to decline until it hits our price target of Rs 109. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 129.

via BL