We recommend a sell in Lupin from a short-term horizon. It is evident from the charts of Lupin that after recording an all-time high of Rs 780 on October 3, it reversed direction and has been on a medium-term downtrend. The stock’s reversal was triggered by the prolonged negative divergence visible in the weekly relative strength index (RSI). The stock price band of Rs 750-780 acts as a significant resistance level.

While trending down, the stock breached the 21 and 50-day moving averages in early October and the 200-day moving average during the previous week. Moreover, the stock fell by 4.5 per cent, penetrating the short-term support level of Rs 600 on November 14.

The daily RSI has entered into the bearish zone and weekly RSI is on this verge of entering this zone. The daily moving average convergence and divergence is signalling a sell, supporting our view. Our short-term outlook for the stock is bearish.

We anticipate the stock to decline further until it hits our price target of Rs 520 in the forthcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 609.

Yoganand D.

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