Reliance Communications Ltd: (NSE: RCOM)
It is hard to believe that the company which once revolutionized the telecom sector is on verge of collapse. The price war and Tariff’s south journey seems to have benefited only the consumers, It is the RCOM shareholders who are crying.
See Long-term chart of RCOM. Only losses and no Profits for Shareholders.
It is clearly evident that stock price will soon be in single figures. The Trend is clearly negative. The question is how much more pain is left in coming days.
Longer term view:
(See below chart) On Analyzing stock on daily charts we can see that a Head and Shoulders pattern breakout has been confirmed. The price came back to retest the neckline but failed to cross above it (shown in circle) and after that, the fall has accelerated. Head of the pattern comes around 150 and distance from head to the neckline is around 90 points. Considering this the Longer term target of the stock comes around Rupees 5.
Short Term view:
There is a common saying between a Technical community that ” Never catch a falling knife”. This stock is a falling knife and no one would like to burn his hands by buying the stock. However, the stock has a short-term support @ 20.35. We can see few more days of distribution in the range of 20-18. Strongest support is @ 16, below that level we will see the stock plunge rapidly to 10 rupees. The stock is in the Oversold zone in most of the technical indicators and oscillators.
The conclusion of RCOM Technical Analysis:
If you are not holding RCOM then there is no need to even look at this wasted stock. If you are an existing trader or investor trapped in this counter then please, do not average your position. Averaging a falling stock can be dangerous. Because it is oversold the stock will sometimes give you 10-20% jumps here and there. Use those to exit your positions in parts. Read how companies like RCOM make investors fool.
Disclaimer: This is my personal views and does not take them as a trading advice. I won’t be held responsible for your any loss or profits.