Today’s Pick: Tejas Networks (₹567.35): Sell

The outlook for the stock of Tejas Networks is bearish. The sharp 4 per cent fall on Thursday confirms a head-and-shoulder reversal pattern on the chart. As such our previous buy recommendation on the stock given in this column earlier this month has gone wrong. The stop-loss has been hit. So, now we recommend reversing the trade to capture the fall from here. The neckline resistance of the head and shoulder pattern is at ₹595. The stock can fall to ₹530-520 in the next two-three weeks. Traders can go short. Accumulate shorts at ₹590. Keep the stop-loss at ₹605. Trail the stop-loss down to ₹560 as soon as the stock falls to ₹555. Move the stop-loss further down to ₹545 when Tejas Networks touches ₹535 on the downside. Exit the short positions at ₹525.