The stock of Sundaram-Clayton has been in a strong downtrend over the last couple of weeks. The stock made a high around ₹5,123 in the last week of November and has tumbled over 18 per cent from there. The stock can fall to ₹4,020-₹4,000 from here. Thereafter a corrective bounce to ₹4,200 cannot be ruled out. However, the trend will continue to remain down.

The bounce towards ₹4,200 will get fresh sellers coming into the market and cap the upside. As such a break above ₹4,200 is unlikely. A pull-back from ₹4,200 will have the potential to break ₹4,000. Such a break ₹3,750 initially and then to ₹3,500 eventually. Traders can go short at current levels . Stop-loss can be placed at ₹4,425. Trail the stop-loss down to ₹4,075 as soon as the stock moves down to ₹3,930.

Move the stop-loss further down to ₹3,910 as soon as the stock falls to ₹3,840. Book profits at ₹3,750. The region between ₹3,550 and ₹3,500 is a strong medium-term support. As such the downtrend can end anywhere in that support zone and a fresh rally is possible thereafter.

(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)

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