Five Stocks Which You Should EXIT Now

The year 2016 was arguably the one of the eventful years in the history of the financial markets. The stock market witnessed a rollercoaster ride in 2016. However, since the beginning of the calender year 2017, the markets have been conquered by the bulls and Nifty has registered gains of almost over 9 per cent since the year began. At this juncture, it is common to hear on the television channels or read headlines in newspapers stating that markets are approaching a new high or this is just a beginning of the ‘mother' of bull runs. Just run down the memory lane and recall the period of 2007 when a portfolio worth Rs.10 lakh at the end of 2007 drastically dropped down to just Rs.3-4 lakh by end of 2008. This is how the market works and it tests your patience as it comes with its own twists and turns which are quite unpredictable.

Going forward, it is definitely going to be a stock-picker's market and it is as significant to know which stock to avoid or sell as it is to know which is the next multi-bagger. Considering this, the DSIJ Technical Team has hand-picked five stocks on the basis of technical patterns and parameters to avoid or sell.

Jindal Steel & Power

The stock is currently trading at Rs.118. Its 52-week high/ low stands at Rs.129.70 and Rs.55.50 as on March 6, 2017 and March 29, 2016. On the daily time frame chart, the stock has formed a ‘Bearish Deep Crab' Pattern; this is a bearish harmonic pattern. The starting point of the pattern i.e. point X starts from the level of Rs.Rs.98.15, the second point i.e. point A stands at Rs.48.10, the third point i.e. B stands at Rs.91.40 which is near about 0.886 per cent retracement, a deep crab has a deeper retracement i.e. 0.886 per cent, the fourth point of pattern i.e. C stands at the level of Rs.62 and the final point i.e. D at Rs.129.70. The point D is at 1.618 per cent of XA leg which lines up with a 2.24 per cent projection of the BC leg. Additionally, the stock has formed a ‘Bearish Counterattack line' or bearish meeting line like pattern, which is a two candlestick pattern that occurs after an uptrend and is considered a top reversal signal. Considering the formation of Bearish Deep Crab along with a bearish counterattack line, the stock is likely to witness a correction in the medium term.

The stock is currently trading at Rs.53.60. Its 52-week high/low stands at Rs.64.05 and Rs.44.70 as on September 8, 2016 and May 24, 2016. The stock registered a high of Rs.104.02 in the month of June 2014; thereafter the stock witnessed a sharp decline to the level of Rs.57.53 in the month of September 2014. The stock retraced almost 78.6 per cent and touched Rs.95.99 level. Thereafter, the stock entered into a decline mode and touched the level of Rs.40.80. The stock witnessed a rally from lower levels, but it failed to cross the downward sloping trendline. At present, the stock again failed to cross its hurdle as defined by the downward sloping trendline and has slipped below its important long term moving average i.e. 200-day EMA.

On the weekly time frame, the RSI has witnessed multiple rejections at levels of 65, which suggests that there is no momentum in the stock. Considering the above factors, there is probability that the stock may underperform in the short-medium term.

Coromandel International

The stock is currently trading at Rs.318. Its 52-week high/ low stand at Rs.358.40 and Rs.170.00 as on February 15, 2017 and March 18, 2016, respectively. This stock has been one of the best performers in recent times. The stock in the month of February 2016 registered a low of Rs.145.50 and a high of Rs.358.40 in February 2017. However, if we analyse the weekly time frame chart of the stock, we observe a formation of ‘Double Top' like pattern. The stock formed first top in the month of October 2014 at Rs.347.16 and the second top was formed recently in the month of February 2017 at Rs.358.40. The double top pattern is a reversal pattern. It is made up of two consecutive peaks that are roughly equal. On the weekly chart, there is a negative divergence formed on the RSI.

Considering the formation of Double Top pattern and the RSI's negative divergence on the weekly chart, we can draw the conclusion that the stock is likely to underperform in future.

Sagar Cement

The stock is currently trading at Rs.727. Its 52-week high/ low stand at Rs.848.50 and Rs.362.00 as on October 14, 2016 and March 9, 2016. The stock has seen a decent run up in the last one year or so. The stock started its rally from the lower level of Rs.389 and touched a high of Rs.848.50 in the month of October, 2016. We have observed formation of bearish harmonic pattern on the weekly time frame of the stock. The pattern is called the ‘Bearish Gartley' pattern. This is a 5-point harmonic pattern. Pattern starts with Point X at the level of Rs.848.50, second point A at the level of Rs.585.50, the first pull back i.e. Point B in the Bearish Gartley pattern must be 61.8 per cent of XA and hence, the 61.8 per cent, i.e. Point B stands at Rs.739, the fourth point i.e. Point C should be anywhere between points A&B, in the above pattern point C is placed at Rs.610, which is almost 78.6 per cent retracement level and the final point D at 78.6 per cent of XA stands at Rs.795. Considering the formation of Bearish Gartley pattern on the weekly time frame, we are of the view that the stock will have a muted performance and may disappoint in the future.

Bajaj Corp

The stock is currently trading at Rs.367. Its 52-week high/ low stand at Rs.438.60 and Rs.324.50 as on April 12, 2016 and November 9, 2016. It is one of the well-known names in the hair oils segment. Its flagship brand is-Bajaj Almond Drops Hair Oil. The stock on the weekly time frame formed a ‘Long-Legged Doji' candlestick pattern as on August 28, 2015. The long-legged Doji candle reflects a great amount of indecision in the stock price. Thereafter, the stock entered into corrective phase. Since October 2015, the stock has been trading in a range. On the weekly chart, the RSI has failed to cross the level of 55-56 and it has been trading in the range of 33 to 55, which suggests sideways trend. On the daily chart, the stock has been trading below its important long term moving average i.e. 200-day EMA.

Considering the above factors, the trend of the stock looks sideways. Hence, we are of the view that the stock may witness tepid performance in future.