Cipla (Rs 391.2): SELL ::Business Line

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We recommend a sell in the stock of Cipla from a short-term perspective. It is evident from the charts of the stock that after taking support at key long-term base level at Rs 350 in October last year, the stock resumed its uptrend. It was on a medium-term uptrend until registering an all-time high at Rs 435 on January 9. However, triggered by negative divergence in weekly relative strength index and daily moving average convergence divergence indicator, the stock changed its trend. Currently it is in a near-term downtrend. Breaking a key support at Rs 404, the stock fell 3.7 per cent accompanied by above-average volumes on January 24.

The stock is hovering well below its 21- and 50-day moving averages. The daily RSI has entered the bearish zone from the neutral region and weekly RSI declining in the neutral region. The daily MACD is charting down in line with the stock price and is about to enter the negative territory, implying downward momentum. The daily price rate of change is featuring in the negative area as well, indicating selling interest.

Our short-term outlook for the stock is bearish. We expect its fall to continue and reach our price target of Rs 375 or Rs 367 in the ensuing trading sessions. Traders with a short-term perspective can consider selling the stock with stop-loss at Rs 399 levels.