Short DLF; target Rs 190: ICICIdirect.com

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Short DLF; target Rs 190: ICICIdirect.com

ICICIdirect.com is bearish on DLF and has recommended short rating on the stock with a target price of Rs 190 in its November 15, 2011 research report.

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ICICIdirect.com is bearish on DLF and has recommended short rating on the stock with a target price of Rs 190 in its November 15, 2011 research report.

"DLF's price witnessed active participation in the recent pullback in the broader markets. The stock rallied from its 52-week low of Rs 173.25 in August 2011 to a high of Rs 251 in early November. This price action is in contrast to its peers, which failed to post any meaningful recovery and are still languishing close to their 52-week lows. A closer examination of the price chart on a daily and weekly time frame reveals the occurrence of some topping out activity, which could spook the recent outperformance and lead to price corrections in the near term."

"The price action since the August 2011 lows has occurred in a well defined rising channel formation. The recent price decline has seen the share price breach this up-trending channel on the daily charts, confirming a change of guard from a shortterm trend perspective. The price activity since the last week of October has resulted in the formation of an evening star candlestick pattern on the weekly chart. An evening star candlestick formation is a three bar reversal pattern, which signals an abrupt halt in the preceding uptrend and indicates that a reversal is on the cards. In the current week, prices have confirmed a short-term reversal by moving below the previous three weeks low On the oscillators front, the 14 period RSI, which gauges the momentum in the price moves, is exhibiting negative divergence on the daily charts, suggesting weakening momentum. Meanwhile, the RSI on the weekly time frame has generated a negative crossover below its nine period average, which further confirms the weakness in the price structure."

"Taking cues from the technical patterns, we expect the price of DLF to head lower towards 190 levels. Therefore, pullbacks towards 218-225 should be utilised to create short positions in the stock. A change of view would be warranted only if the stock posts a sustained closing above 236 levels," says ICICIdirect.com research report.

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To read the full report click on the attachment