Technical Analysis: Eicher Motors, Mahindra CIE Automotive, and Sharda Cropchem

Eicher Motors (₹3,582.1)

Signs of a short-term fall

Eicher Motors’ stock, which took support at ₹2,850 in early April, has been on a rally since then. But after hitting the resistance at ₹3,700 three weeks ago, the stock lost momentum and started moving in a sideways trend. Notably, it declined last week, and the chart shows that the stock has formed an evening star candlestick pattern.

Considering this pattern and that there is a resistance at ₹3,700, the likelihood of a decline from here looks high. The price could possibly drop to ₹3,250. Hence, one can go short on Eicher Motors at the current level of ₹3,582. Add more shorts if the price inches up to ₹3,640. Place stop-loss at ₹3,800 initially. When the price falls below ₹3,400, alter the stop-loss to ₹3,525. Book profits at ₹3,250.

Mahindra CIE Automotive (₹506.6)

Shows good upward momentum

Mahindra CIE Automotive’s share price has been on a long-term uptrend. The latest leg of uptrend began in April at around ₹335. Last week, the stock showed good bullish momentum as it ended the week on a high note. It has closed above the key level of ₹500. Considering the prevailing price action, the likelihood of an extended rally from here is high.

Therefore, we recommend buying the stock of Mahindra CIE Automotive at the current level of about ₹507. Accumulate more shares if the price dips to ₹495. Keep initial stop-loss at ₹475. When the stock rallies to ₹540, exit half of the longs. For the remaining positions, revise the stop-loss up to ₹510. Liquidate the rest at ₹560.

Sharda Cropchem (₹555.8)

Breaches a key level

Sharda Cropchem’s stock has been largely tracing a sideways trend since the beginning of this year. That is, it was oscillating between ₹440 and ₹534. Last week, the stock garnered enough momentum leading to a decisive break out of the barrier at ₹534. This has opened the doors for further rally. Potentially, Sharda Cropchem’s share price can rise to ₹700 in the coming weeks.

Yet, there is a good chance for the stock to soften to ₹534 before the next leg of rally. So, go long now at ₹556 and add more longs if the price corrects to ₹534. Place stop-loss at ₹480 initially. Modify the stop-loss to ₹595 when the stock surpasses ₹625. Further, when the stock rallies past ₹660, tighten the stop-loss to ₹630. Exit at ₹690.