We recommend a sell in the stock of Indian Overseas Bank from a short-term perspective. It is apparent from the charts of the stock that ever since peaking out in November 2010 peak of Rs 176, the stock has been in a long-term downtrend. Medium-term trend has been down from its January 2013 high of Rs 94. Following a corrective up move, the stock encountered key resistance at around Rs 75 recently and started to decline. Strengthening the stock’s downtrend, it fell almost 3 per cent with above average volume on Wednesday.

The stock is trading way below its 50 and 200-day moving averages. The daily as well as weekly relative strength indices have re-entered the bearish zone from the neutral region indicating downward momentum. Likewise, price rate of change indicators are hovering in the negative terrain implying selling interest. Medium-term downtrend is intact and the stock has resumed this trend.

We are bearish on the stock from a short-term perceptive. We expect its decline to prolong and reach our price target of Rs 68.4 or Rs 67 in the forthcoming trading sessions. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 72.7 levels.

(This article was published on March 13, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.