From Mid-march, Stock price of Shriram Transport finance traded in sideways without any significant movement. But in recent days, Price action broke through an important support zone at 1190 – 1200. The so-called Breakout coincided with rising volume, indicating that selling pressure has built up and stock prices might fall into grip of bears. Although the signs are convincing, it’s better to keep in mind that most of the breakouts usually fail and only very few of them succeed. Take a look at the Price action analysis on the chart.
Shriram Transport Finance – Price Action Analysis
If you’re a fan of Breakout trading you can keep this stock under your watch list. But don’t jump into the trades without a proper confirmation. It’s better to wait for a pullback or a retest to confirm the Breakout. To make sure that sellers are willing to sell at higher levels, watch the price action after a retest or a pullback and then initiate trades based on the resulting price action.
Another interesting fact in this setup is the market sentiment. One of major stake holders in Shriram group of companies – Ajay Piramal is planning to sell all his holdings in the company including the ones in Shriram transport finance. As per the sources and reports he owns almost 10% shares of the company.
(Source : Economic times)
Although it’s not yet announced publicly (the process is still undergoing), I guess that’s one of the major driving factor behind the market sentiment. Big players are likely to pay attention to this which could have an impact over share prices at least for a shorter duration. The recent downside breakout also clearly resonates with the event. So traders who’re willing to trade the setup must also keep an eye on the undergoing talks that can impact the price action.
