Short -to medium-term traders can look to sell the stock now for a possible target towards 150 levels in the next 1-2 months, suggest experts.
The stock hit a 52-week high of Rs 191.45 on 16th August 2023, but it failed to hold on to the momentum. It closed at Rs 170.25 on 24 January 2024 which translates into a downside of more than 10%.
Most of the short-term indicators hint at a bearish bias; hence, traders can look to sell the stock on any bounce back. The stock is trading below the 5,10,30, and 50-DMA on the daily charts. It is trading below the 150-DMA but above 200-DMA.
If the auto index faces resistance Ashok Leyland stock price could see additional pressure, suggest experts.
It seems that there is a rhythmic top formation pattern that occurs around January, with a time gap of 3 years, data suggests.
“This pattern has a track record of 15 years and extrapolating it into the current context indicates a potential topping formation. If the Auto Index moves below the level of 18100/17800, it will confirm the price-wise confirmation of this pattern,” Kapil Shah, Technical Analyst, Emkay Global Financial Services Limited and Trainer at FinLearn Academy, said.
“Nifty Auto Index, it seems that from a time perspective, the index has experienced time-wise corrections for almost 1 year in the majority of cases. This indicates that there could be an upside cap for the Auto Index in the year 2024,” he said.
The daily Relative Strength Index (RSI) is at 40.1. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed. The daily MACD is below its Signal and Center Line, this is a strong bearish indicator.
“Looking at Ashok Leyland’s price performance since the 2020 bottom, it appears that the stock has experienced 4 major falls, with 3 out of 4 falls being around 20%. The stock is currently down by 10% in the recent fall, and there may be scope for a further 10% fall in the short term,” highlights Shah.
“As a technical validation, the stock has breached a rising trendline, which is a bearish continuation sign,” he said.
“This suggests that the stock may offer a short opportunity in the range of 173 to 178 with a stop loss of 182. The downside potential could be up to 155,” recommended Shah.
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(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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