Let’s have a Bear Ride on Maruti Udyog Limited

Keeping in mind the top down approach, the whole auto pack is in a resistance zone after the upward movement. A very significant development could be seen on the charts of Maruti.
The short term moving average (20-EMA) is moving towards the medium term moving average (50-EMA). It would be a pivot point to see the crossover of these two lines.

• The ADX has topped out. It is near the value of 47.5 which suggests that the counter trend will be strong. Also the +DI &-DI have topped and bottomed up respectively. It suggests that the buyers are decreasing and there is some profit booking by sellers.
• The MACD line has topped out and is moving lower. If it is able to move below the Signal line this counter can go for a good correction. The crossover of these lines will generate a sell signal for the scrip.
• The MACD Histogram has also topped out in the previous session. If it continues to decrease then the stock could start its downside.
• The momentum indicator is also trying to go below the 80 levels. The second top out is in itself a significant indicator. As the chart suggests, the %K line is going below the %D line.
  
• Thus if both these lines go below the 80 levels then it would be a momentum in the counter on the sell side.
  

We can trade the stock for a sell within a price range of 1365-1359 with a strict stop loss of 1% at Rs. 1378 for a target of Rs.1305 near the 50-EMA.

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