Let’s have a Bear Ride on Educomp Solutions Limited.

This scrip is in a sideways trade from the last few sessions. The short term moving average (20-EMA) is acting as a tough resistance to the price movement. It has failed to cross this level of 555-560 even the benchmark has added a lot of weight.

• Technical indicators suggest the same story. The ADX is near its low. It seems that there is an bottom up formation on the charts. The crossover of the +DI & -DI has finally occurred with lot of failed signals in the scrip during previous trading sessions. Thus the sellers are now in a better position in the counter. Profit booking is taking place in this stock, thus we can expect some bearish movement in this stock.
• The most significant development is the crossover of the MACD lines in the negative territory. This crossover could be a inflection point for the prices to go for a dip. The relative crossover of the MACD line below Signal line would technically generate a sell signal. The movement in the negative domain is itself an indicator to get out from the long side.
• The MACD Histogram has marginally closed in the positive zone. Any movement with a negative reading will suggest bearishness in the stock.
• The Slow Stochastic momentum is itself for profit booking in the scrip. The %K line is below the %D line which suggests a selling momentum in the counter. The subsequent movement below the 50 levels would enhance the current selling.

It would be advisable to go for a short with a trading price in the range Rs.560-565 with a strict stop loss of 1% at the price of Rs.571 for a price target of Rs.515-520.

Akash Singh, Technical Analyst [Akash@hbjcapital.com], HBJ Capital Services Pvt Ltd.