Pidilite Industries (₹782.2)

The stock of Pidilite Industries tumbled 3 per cent on Wednesday, breaking below a key support level of ₹800 as well as 21-day moving average. This fall gives an opportunity for traders with a short-term perspective to sell the stock at current levels. The intermediate-term uptrend that was in place from the December 2016 low of ₹568 encountered resistance at around ₹830 last week.

The stock registered an all-time high of ₹837 on Friday and started to decline thereafter triggered by negative divergence in the daily relative strength index. Moreover, the stock has formed a bearish engulfing pattern at the resistance level backing the short-term trend reversal. In the last two treading sessions, the stock has plunged 5.6 per cent with good volume. The stock trades well below its 21-day moving average.

The daily relative strength index has entered the neutral region from the bullish zone and the weekly RSI is correcting from the overbought levels. The daily price rate of change indicator has entered the negative territory implying selling interest. The short-term outlook is bearish. The stock can extend its decline and reach the price targets of ₹750 and ₹735 in the forthcoming trading sessions. Traders with a short-term view can sell the stock with a stop-loss at ₹800.

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

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