Let’s have a Bear Ride on Godrej Industries Ltd….

With the benchmark reeling under pressure due to the global cues and some pressure on the selling side. The Godrej Industries Ltd counter is showing some weakness on the charts. We could expect some wide movements in the scrip in the coming sessions.

• The short term moving average (20-EMA) is trading above the medium term moving average (50-EMA) which shows that the medium term outlook is still on the upside. However in the case of correction, the short term moving average would be acting as a strong support.

• The ADX indicator is at the 49.76 level which suggests a very strong trend on the upper side. However the current sideways movement of the indicator could top out giving a strong signal that the surge on the short term basis is over. The +DI is on the lower trajectory which suggests that the buyers are exiting their position. The –DI is moving towards a higher level which points that the sellers in the scrip are increasing. Considering the periodic nature of the indicators, a crossover of these indicators, would signal correction in the counter.

• The MACD trend indicator is showing some important development on the charts. The MACD line is just below the Signal line which could bring some wide swings in the prices in the coming sessions. The crossover of these two line would bring the correction in the counter. The MACD Histogram has closed at zero levels which would generate a call on the side to which it jumps. Any further penetration in the negative domain would bring some movement on the downside.

• The Slow Stochastic momentum indicator is also giving a sell signal on the stock. The %K & %D lines are on a correction on an absolute basis. On the relative basis the %K line is still below the %D line which shows some selling momentum in the scrip.

We advise to go short on the stock at the trading price in the range of Rs. 170.9-172.5 with a strict stop loss of 1% to the trading price at the price of Rs. 174.35 for a price target of Rs. 164-162.


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