Stay away from these stocks

Published June 20, 2019

Markets have seen a correction in the past two weeks. After making a high of 12088.55 points on the closing basis, Nifty 50 index has corrected by nearly 3.3 per cent. On Wednesday the index moved more or less horizontally and closed at 11691 points.

Our focus today is on stocks that have corrected considerably with respect to their 52 weeks' high. If we look at 52 weeks' high, Nifty 50 index has lost around 3.5 per cent. On the other hand, other indices like Nifty Media and Nifty Auto have lost by 35 and 31 per cent respectively. Ones that lost almost by the same percentage as the main index, are Nifty IT and Nifty Financial Services. Below are stocks that have fallen considerably and are now making new lows. Better to stay away from such stock if you trade in equity.

Maruti Suzuki India Li (MARUTI.NS) Close: 6424.65

Maruti Suzuki India Limited is in a falling trend channel in medium term and has lost almost 29 per cent from its 52 weeks' high. This shows that investors over time have bailed themselves out of the stock and sold steadily at lower prices to avoid further loss. This indicates pessimism among investors regarding the overall development of the company.

The stock has marginally given a sell signal from a rectangle formation by breaking below 6470 rupees. Further fall to 5658 or lower is signalled. Next support is around 4800 rupees in the long term.

RSI below 30 shows that the stock has strong negative momentum in the short term. Short term volume balance is negative, which indicates higher number of sellers at falling prices than buyers who are willing to buy at rising prices. This strengthens the falling trend.

We had given a negative recommendation for Maruti Suzuki India Limited on 18.09.2018 at the price 8395 rupees and hold our negative outlook this time as well.

Recommendation one to six months: Negative

Indiabulls Housing Fin (IBULHSGFIN.NS) Close: 555.50

Shedding almost 60 per cent of its value from its 52 weeks' high, Indiabulls Housing Finance Limited shows weak development in a falling trend channel in the medium and long term. Falling trends indicate that the company experiences negative development and falling buy interest among investors.

The stock tested the falling trend line in April, only to turn down. Price has now broken many support levels especially at 600 rupees. There is now no clear support shown on Investtech's medium or long term graphs. Hence the downside can be huge. In case of any reaction up, there is resistance around 600 and 680 rupees.

RSI is below 30 after the falling prices in the past weeks. The stock has strong negative momentum and further decline is indicated. However, particularly in big stocks, low RSI may be a sign that the stock is oversold and that there is a chance for a reaction upwards. That could give another opportunity to sell the stock. The stock is overall assessed as technically negative for the medium long term.

Recommendation one to six months: Negative

Other stocks to stay away from are DISHTV, TATAMOTORS, RELINFRA, PEL, to name a few.

The analyses are based on closing price as per June 19, 2019. Maintaining proper stop loss is always recommended.