Technical Analysis – Neyveli Lignite – Consider Shorting
Neyveli Lignite Corporation (Rs 148.5): The stock has been moving in a narrow range of Rs 165 and Rs 140 since late January 2010. It now appears that the stock might be able to break this range, but on the down side. Neyveli Lignite finds a crucial resistance at Rs 163 and a support at Rs 144. A dip below Rs 144 can weaken the stock to Rs 125, though in between it may find minor support at Rs 136. Only a close above Rs 163 would change the view to positive. In that event, the stock could test this January peak of Rs 177..
F&O pointers: The Neyveli Lignite futures (market lot 1,475) added close to 3.5 per cent in open interest on Friday even as the counter fell by 4 per cent. Accumulation of open interest in falling market signals a weakening trend. The futures and the spot closed at same level of Rs 148.5. Options were not active enough.
Strategy: Consider going short in Neyveli Lignite if it dips below Rs 144 for an initial target of Rs 136.
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