We recommend a sell in the stock of Neyveli Lignite Corporation from a short-term perspective. It is apparent from the charts of the stock that it has been on a medium-term downtrend from its January peak around Rs 87. In early May, the stock encountered key resistance around Rs 72 and started declining. Since then, the stock has been on a short-term downtrend. The stock subsequently, breached its 21- and 50-day moving averages and hovering well below them.
On Monday, the stock emphatically breached its key support at Rs 65 by declining 4 per cent accompanied by above average volume. This decline has reinforced the stock’s short-term downtrend. The daily relative strength index has entered the bearish zone from the neutral region and weekly RSI is featuring in the bearish zone. Daily as well as weekly price rate of change indicators are featuring in the negative area implying selling interest.
We are bearish on the stock from a short-term perspective. We expect its decline to continue and reach our price target of Rs 60.5 or Rs 59.5 in the trading sessions ahead. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 64.8 level.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)