Nagarjuna Construction Company

We recommend a sell in the stock of Nagarjuna Construction Company from a short-term perspective. It is evident from the charts of the stock that it had been on an intermediate-term uptrend from March 2009 low of Rs 34 until it encountered significant long-term resistance in the band between Rs 190 and Rs 200 in April 2010.



After re-testing this resistance band this June, the stock changed direction triggered by prolonged negative divergence displayed in the weekly moving average convergence divergence oscillator. Since then, the stock has been on a medium-term downtrend forming lower peaks and lower troughs. While declining, the stock decisively breached its 200-day moving average and support at Rs 170 in August.

The stock is trading well below its 21 and 50-day moving average. Besides, short-term trend is also down for the stock. The daily relative strength index is featuring in the bearish zone and weekly RSI has entered in to this zone. Daily MACD has signalled a sell and is hovering in the negative territory.

Weekly MACD has entered in to the negative territory implying downward momentum. Our short-term outlook on the stock is bearish. We anticipate it to decline further until it hits our price target of Rs 145 or Rs 140 in the upcoming trading sessions. Short-term traders can consider selling the stock while maintaining stop-loss at Rs 153.

via BL