Welspun Gujarat

We recommend a sell in Welspun-Gujarat Stahl Rohren at current market price. The chart of the Welspun-Gujarat Stahl Rohren suggests that the stock had been on a steady bull run from its March 2007 low of Rs 90 till it marked a life high of Rs 537 in mid of January 2008. However, after marking life high, the stock reversed direction and began to decline. The prolonged bearish divergence in the weekly momentum indicator and the weekly moving average convergence divergence lines in the overbought region have strongly supported this reversal. On January 21, the stock tumbled 14 per cent, penetrating the intermediate up trendline as well as the 21-day and 50-day moving average lines. The daily momentum indicator is likely to enter the bearish zone and the weekly momentum indicator is likely to enter the neutral region from the bullish zone. On the upside, the immediate resistance for the stock is at Rs 462 and the subsequent resistance is at Rs 490 levels. The short-term investors can book profit or sell the stock while keeping the stop-loss at Rs 455 level. Considering the above arguments, we expect the stock to decline further in the short-term to the immediate support level of Rs 370.