Short SBI at CMP with a stop-loss at Rs.235 for the target of Rs.210

The sideways movement in the Rs.232-250 range, within which the stock of SBI traded since mid-September, was broken last week. It fell 6 per cent. 

Though there is an immediate support at Rs.220 — which is likely to be tested this week — the overall outlook is bearish. The price action since the second week of September suggests the formation of a rounding pattern on the weekly chart. 

This signals a continuation of the downtrend in place since January this year. A strong break below Rs.220 can drag the stock lower to Rs.210 or Rs.200. Short-term traders can go short with a stop-loss at Rs.235 for the target of Rs.215. 

Intermediate rise to test the resistance at Rs.232 can be used to accumulate short positions. But a strong rally above Rs.233 will ease the pressure. Such a break can pave way for a rise to Rs.240 and Rs.243.