Today's Pick - Cummins India

We recommend a sell in Cummins India from a short-term point of view. We notice in the charts of Cummins India that the stock has commenced a medium-term up move following the reversal from the support at Rs 225 in early July. However, this up trend started losing momentum in late August.

This was reflected by the negative divergence in the relative strength index (RSI). Moreover, the stock encountered resistance at Rs 325 (200-day moving average coincides with this level) and began declining. On September 10, the stock fell by 3 per cent, breaching the 21-day moving average conclusively. The daily and weekly RSI are heading towards the bearish zone.

The moving average convergence and divergence indicator also has signalled a sell and is declining. We are bearish on the stock from a short-term perspective. We expect the stock’s decline to prolong until it hits our price target of Rs 270 in the approaching trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 312.