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Investors with a short-term perspective can consider selling the stock of Motherson Sumi Systems at current levels. The stock registered an all-time high at ₹382 in early July and started moving sideways with a negative bias. It has declined 6 per cent so far this week, forming a bearish engulfing candlestick pattern on the weekly chart. This is a bearish reversal pattern.
Backing this trend reversal, both the daily and weekly relative strength indices are displaying negative divergence. Likewise, the moving average convergence-divergence indicator on the daily chart is also displaying negative divergence. Now, the stock is testing its immediate support at ₹350.
A decisive fall below this level can trigger further selling pressure and the stock can extend its decline leading to a short-term downtrend. Targets are ₹338 and ₹330 levels. Sell the stock while maintaining a stop-loss at ₹361.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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