GAIL India Ltd has fallen over 7 per cent compared to a near 8 per cent rise seen in Nifty50 in the same period, but chart patterns suggest that the stock could face further selling pressure in May series.
The stock touched a 52-week high of Rs 173.45 on 19 April but failed to hold onto the momentum. It has fallen more than 13 per cent since then to hit Rs 150 on 11 May 2022.
The stock with a market capitalization of more than Rs 66,000 crore is a perfect stock for a sell on rise strategy as prices are making a ‘Lower Top Lower Bottom’ structure on the daily chart.
The near-term target for the stock is placed at Rs 141-144 for May series. The stock touched an intraday low of Rs 148 on 12 May.
The stock is trading below crucial short-term moving averages of 5, 10, 20, and 50-DMAs. It is trading below 100-DMAs but above the long-term moving average of 200-DMA.
ADVERTISEMENT
The stock has fallen more than 5 per cent in a week, and more than 9 per cent in a month, data from Trendlyne shows. The moving average convergence divergence (MACD) is below its Signal and Center Line, this is a strong bearish indicator.
“GAIL seems to have completed an ‘Impulsive five’ wave up move at the recent high of Rs 173. Since then, prices are in a corrective phase and have formed a ‘Lower Top Lower Bottom’ structure on the daily chart,” says Ruchit Jain, Lead – Research, 5paisa.com.
The swing low of Rs 154 has been breached and now it should act as a resistance on the pullback move. The ‘RSI’ oscillator on the daily chart is also hinting at a negative momentum.
“The retracement theory indicates a probable target around Rs 144 in the short term while if the stock corrects further than we expect the stock to test Rs 141 level which is the previous swing low and the ‘200 DEMA’ support,” he said.
ADVERTISEMENT
He further added that short-term traders can look to go short on a pullback in the range of Rs 153-154 with a stop loss above Rs 160 for a probable target of 144 and Rs 141 in the May series.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
