We recommend a sell in the stock of Union Bank of India from a short-term perspective. It is apparent from the charts of the stock that following an intermediate-term uptrend from its August 2012 low of Rs 150, the stock encountered resistance at Rs 288 in early January. The stock changed its trend subsequently triggered by negative divergence in daily relative strength index and in daily moving average convergence divergence indicator. Since then, the stock has been in a short-term downtrend.
On January 24, it fell 3.5 per cent breaching its 50-day moving average as well as uptrend-line. The stock is hovering well below its 21- and 50-day moving averages. Further reinforcing the bearish momentum, it declined 3 per cent accompanied by above average volume on Wednesday. The daily RSI has re-entered the bearish zone from the neutral region and weekly RSI is moving lower in the neutral region. The daily MACD is trending lower in line with the stock price and is featuring in the negative area implying bearish momentum.
We are bearish on the stock from a short-term perspective. We expect its downtrend to continue and reach our price target of Rs 234 or Rs 230 in the upcoming trading sessions. Traders with short-tem perspective can consider selling the stock with stop-loss at Rs 245 levels.