Ambuja Cements

We recommend a sell in the stock of Ambuja Cements from a short-term trading perspective. It is apparent from the charts that the stock has been on an intermediate-term uptrend since November 2009 low of Rs 82. However, the stock encountered significant long-term resistance in the band between Rs 120 and Rs 125 in late March 2010 and started to lose its bullish momentum. Moreover, the stock reversed direction forming a evening star candlestick pattern last week. A negative divergence in daily moving average convergence and divergence and also in weekly relative strength index confirms that the stock has reversed direction.

On May 4, the stock tumbled almost 4 per cent penetrating the medium-term uptrend-line, which was in place since February 2010, and the 21-day moving average. Daily RSI is on the brink of entering the bearish zone form the neutral region and weekly RSI has entered the neutral region from the bullish, implying reinforcement of bearishness. The stock could fall to Rs 109 in the forthcoming sessions. Short-term traders can sell the stock with stop-loss at Rs 120.

via BL