Conclusively breaking through a key support as well as 200-day moving average at ₹87, the stock of Tata Power Company tumbled 5.8 per cent on Tuesday. This fall gives traders with a short-term perspective, the trigger to sell the stock at current levels.
Since encountering an important resistance at ₹112 in early July, the stock has been on a short- to medium-term downtrend. But, its key support provided a base around ₹87 for almost a month, which has now been broken. The stock is trading well below its 21- and 50-day moving averages. The relative strength index on the daily chart has entered the bearish zone from the neutral region and weekly RSI is on the brink of entering this zone. Both the daily and weekly price rate of change indicators are hovering in the negative terrain implying selling interest. We expect its downtrend to extend and reach the price target of ₹80 and then to ₹78.5 levels in the ensuing trading sessions. Sell the stock with a stop-loss at ₹85.5.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)