Technical Analysis

Motherson Sumi Systems: Sell

Yoganand D | Updated on March 25, 2019 Published on March 25, 2019

Investors with a medium-term perspective can sell the stock of Motherson Sumi Systems (₹146) at the current levels. Since recording a new high at ₹263 in December 2017, the stock has been in a strong downtrend. The corrective rally that was in place since February this year encountered a key resistance at ₹170, and the 200-day moving average poised at ₹172 halted the rally. Triggered by a negative divergence in the daily relative strength index and price rate of change indicator, the stock changed direction recently. The short-term trend is down now. On Friday, the stock plunged 7 per cent, accompanied by extraordinary volume, conclusively breaking below a key support at ₹150.

With this fall, the stock had plummeted 11.6 per cent in the previous week, witnessing selling pressure. The stock trades well below the 21- and 50-day moving averages. The daily relative strength index has entered the bearish zone from the neutral region and the weekly RSI is likely to enter the bearish zone from the neutral region.

Moreover, the daily as well as weekly price rate of change indicators feature in the negative territory, implying selling interest. Overall, the medium-term outlook is bearish for the stock of Motherson Sumi Systems. The stock can continue to trend down and reach the price targets of ₹130 and ₹120 over the medium term. Investors with a medium-term perspective can sell the stock with a stop-loss at ₹158.

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