We recommend a sell in the stock of Dena Bank from a short-term perspective. It is apparent from the charts of the stock that since peaking out in January at Rs 128, the stock has been on an intermediate-term downtrend, forming lower peaks and troughs. In late June this year, the stock conclusively broke through its key long-term support at Rs 80 and continued to decline. Important support around Rs 66 was cushioning the stock over the past three weeks.

On Wednesday, the stock decisively broke this support by tumbling 5.7 per cent accompanied by above average volume. The stock is trading well below its 50- and 200-day moving averages. The daily relative strength index has re-entered the bearish zone from the neutral region and weekly RSI is featuring in the bearish zone. Both daily and weekly moving average convergence divergence indicators are featuring in the negative territory. Similarly, price rate of change indicators are hovering in the negative terrain implying selling interest.

Our short-term outlook on the stock is bearish. We expect its downtrend to continue and reach our price target of Rs 61.2 or Rs 59.5 in the forthcoming trading sessions. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 65.2 level.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

(This article was published on July 24, 2013)
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