Stock market analyst Hitendra Vasudeo has suggested investors to 'sell' Essar Oil stock as there are full chances of a downward trend in this stock.

According to Mr. Vasudeo, investors can sell the stock around Rs 129.40-Rs 135.30 with a stop loss of Rs 139.10 to achieve a target between Rs 119.70-Rs 104.20.

The shares of the company on Wednesday (July 08) closed at Rs 125.55, down Rs 14.45, as against its last closure of Rs 140 on Tuesday (July 07) on the Bombay Stock Exchange (BSE).

The total volume of the shares traded stood at 2,483,595. The scrip hit an intraday high of Rs 139.10 and an intraday low of Rs 123.55. The share price has seen a 52-week high of Rs 246.50 and a low of Rs 54.10 on BSE.

It is advantageous to sell the stock at the said level as the counter is under huge pressure. If the stock fell below Rs 102, it may fell further.  

After selling the stock, the interested investors can purchase the stock again at a low price, for medium term prospective to make good profits.

It is clear from the charts that after bottoming in early March at Rs 60, the stock sped up in early April 2009. But, following an up-move to Rs 194, it found major resistance in the range of Rs 180 and Rs 195 during the last month (June 2009). Since then, Essar Oil has been on a medium-term downswing.

Analysts notice the formation of a bearish engulfing candlestick patterns in daily and weekly charts, actuating the trend reversal. While trending down, Essar Oil conclusively broke its 21-day moving average and key support levels at Rs 160.

Furthermore, the stock came through another key support at Rs 130 by declining 10% on July 8. The daily relative strength index is featured in the bearish zone and the weekly RSI is falling in the neutral zone towards this region. Besides, the daily moving average convergence and divergence indicator has entered the pessimistic terrain.
 
Essar Oil, in June 2009, said it will raise around Rs 9,606 crore via different domestic as well as international fund raising routes.

Essar Oil would raise funds through ADRs, GDRs and FCCBs.

During the existing year, Essar Oil`s investment is likely to surge up to $70 million in exploration and production (E&P) if a long-pending production sharing contract (PSC) with the administration for the Ratna and R-Series fields is concluded early.

For the three month period ended March 2009, Essar Oil registered profit of Rs 6,600 million as against a loss of Rs 84.80 million in the same quarter previous year.

During the quarter, net sales climbed up 143.59 times to Rs 68,150.00 million, whilst total income increased 139.23 times to Rs 68,320.00 million.

It posted profit of Rs 5.53 a share in the same period as against with a loss of Rs 0.07 a share in previous year period.