Sell RIL, Hero Moto Corp shares: Markets looking tired; check what technical charts say

Published: April 15, 2020 6:26 PM

While the underlying short term trend remains up, the Nifty is showing some signs of tiredness as a sharp selloff was seen on Wednesday from the highs of the day.

The current short term uptrend will reverse if the Nifty closes below the recent lows of 8874.
  • Subash Gangadharan

After rising from a low of 8055 touched in early April 2020, the markets have been consolidating in a
range between the 8874-9261 levels this week. While the underlying short term trend remains up, the
Nifty is showing some signs of tiredness as a sharp selloff was seen on Wednesday from the highs of the
day. The current short term uptrend will reverse if the Nifty closes below the recent lows of 8874. The next downside targets in this scenario are at 8555. Given that the Nifty is in an intermediate downtrend, the odds seem more of a breakdown of the 8874-9261 trading range. On the upside, the Nifty would need to cross the recent highs of 9261 convincingly for the bulls to remain
in control.

Stock recommendations:

Reliance: Sell – Rs 1150
Target: 1010
Stop Loss: 1220

After rising sharply from a low of 875 touched in March 2020, Reliance has gradually moved higher and
made higher tops and higher bottoms in the process. The stock has been consolidating in a range between the 1160-1233 levels for the last few sessions until today, when it broke down from this range. Technical indicators too are giving negative signals as the stock trades below the 50-day SMA and the
14-day RSI has eased lower. We therefore recommend selling Reliance between the 1148-1180 levels for a downside target of 1010. Stop loss is at 1220.

Hero Moto Corp: Sell – Rs 1824
Target: 1550
Stop Loss: 1974

Hero Moto Corp too has risen from the lows of 1543 and is now showing signs of tiredness in the near
term. The stock recently found resistance at the 50-day SMA and corrected in the last two sessions,
thereby making new near term lows. Technical indicators too are giving negative signals as the stock trades below the 50-day SMA and the 14-day RSI has started easing lower. We therefore recommend shorting Hero Moto Corp between the 1810-1825 levels for a downside target of 1550. Stop loss is at 1974.

  • Subash Gangadharan is Senior Technical and Derivative Analyst at HDFC Securities. Views expressed are the author’s own.

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