Sell Signals in Three Big Stocks

Published December 07, 2018

Webinar December 13th
Join our free online webinar on Wednesday December 13th. Analyst Kiran Shroff and Country Manager Jan Marius van Leeuwen will give an introduction to Investtech's analyses and present stock picking tools & strategies.

The market dropped considerably Thursday, and Nifty 50 (NIFTY) closed at 10601 points after a decline of 1.69 per cent. The previous time the index lost this much was Oct 11, when it closed down 2.16 per cent.

263 shares were up and 1223 were down, while 62 remained unchanged, and there was no trading in 255 shares.

Like we wrote early this week about one stock that had topped the Top50 list, today we went through our Stock Selection option and filtered out criteria. First criteria was to have stocks that have liquidity of over 500 crores. Second that they are in a negative trend or downward trend channel. And third was to sort them as per highest negative scores. The three stocks that topped the selection list were RELCAPITAL, PNB and ASHOKLEY.

Reliance Capital Limit (RELCAPITAL.NS) Close: 211.40

Reliance Capital Limited has broken down through the floor of the falling trend channel in the medium term, which signals an even stronger falling rate. Investtech has done extensive research on stock prices in various scenarios with respect to its position along the trend channel. More about the research can be read here.

The negative development, however, may give rise to short term corrections up from today's level. The stock has resistance at rupee 224-262 rupees. The stock is overall assessed as technically negative for the medium term.

Investtech's outlook (one to six months): Negative

Ashok Leyland Limited (ASHOKLEY.NS) Close: 102.10

Ashok Leyland Limited is in a falling trend channel in the medium term. The stock has broken down through the support at rupee 106. In case of positive reactions, there will now be resistance at rupee 106 and 112. In the long term chart, the stock price is standing on the neckline of a head and shoulders formation. A break and close below the neckline may lead to further downfall. The next support is nowhere before 77 rupees.

The short term momentum of the stock is strongly negative, with RSI below 30. This indicates increasing pessimism among investors and further decline for Ashok Leyland Limited.

Investtech's outlook (one to six months): Negative

Punjab National Bank (PNB.NS) Close: 66.10

After correcting for over a year and falling by almost 70 per cent from last year's October high, Punjab National Bank stocks are still in a downtrend and reverted back after testing the resistance at 74 rupees and are heading back to support at 60 rupees. If the price breaks below this support, that may initiate fresh selling in the stock. A reversal in trend can not be expected unless the price closes above 74-75 rupees level making higher tops and higher bottoms.

The negative volume balance indicates that volume is high on days with falling prices and low on days with rising prices, which weakens the stock. The stock is overall assessed as technically negative for the medium term.

Investtech's outlook (one to six months): Negative

The analyses are based on closing price as per December 06, 2018. Maintaining proper stop loss is always recommended.