F&O Buzzer | Short Apollo Tyres, technical indicators show bearish trends

Technical indicator suggests that shares of Apollo Tyres are set to decline.

At 1 pm, the stock was trading at Rs 374.4 on the National Stock Exchange, marking a nearly 2.5 percent drop. Over the past five days, the stock has experienced a 4.25 percent decline. The scrip is displaying weaker performance compared to the broader indices like Nifty and Nifty Auto, which decreased by 0.52 percent and 0.8 percent on October 23.

The Indian market is facing selling pressure. “The index has broken below the range of 19,500 to 19,800 after trading within that range for almost 10 trading sessions. If the index continues to move below 19,500, it might lead to further losses down to the 19,350 level. As long as the index remains below 19,530, it will continue to be under pressure,” said Kapil Shah, technical analyst at Emkay Global Financial Services.

Analysing the charts, Shah recommends shorting the stock with price targets of Rs 361 and Rs 345 if the selling pressure persists. He bases this suggestion on the stock’s relative weakness compared to broader indices like Nifty Auto and Nifty 200, a 38.2 percent retracement level resistance shown in its trendline, and the presence of a bearish candle on the chart that breached the rising trendline today, signifying weakness in the stock, which is also a bearish continuation sign.

Analyzing the charts, Shah recommends shorting the stock with price targets of Rs 361 and Rs 345 if the selling pressure persists.

“Apollo Tyres is in a negative trend on the daily chart. The recent rise witnessed selling pressure at the resistance level, followed by the breach of the rising trendline. This indicates a bearish continuation sign. With a stop loss at 387, the stock appears weak, with a potential target of 345,” Shah said.

In its June quarterly results, the company’s net profit more than doubled to Rs 396.91 crore from Rs 190.68 crore in the previous year, with revenue increasing by 5.09 percent on-year to Rs 6,244.58 crore. EBITDA also increased by 55.19 percent on-year to Rs 1,086.99 crore, primarily due to falling raw material costs that improved the company’s margins.

Apollo Tyres’ shares have risen by 12.74 percent in the last six months, underperforming the Nifty Auto index, which has provided returns of 26.89 percent in the same period.