Today's Pick: Allahabad Bank (Rs 108.35)

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We recommend a buy in Allahabad Bank at current levels. From the weekly chart we see that the stock is in a long-term up trend since July 2006 low of Rs 53, forming higher peaks and higher troughs. However, from the daily chart, we note that the stock met with resistance at Rs 108 in July 2007 and began to decline. The price action since this July peak appears to be an ascending triangle pattern and the stock is currently on the verge of breaking out of the upper boundary of this pattern. The ascending triangle pattern is generally a bullish pattern. The volumes have been increasing for the past two trading sessions. Moreover, the stock’s medium-term uptrend that commenced from the August trough of Rs 80 is still in place. The daily and weekly RSI are featuring in the bullish region. Immediate support for the stock is at Rs 100 and the subsequent support is at Rs 90. Short-term investors can buy the stock with stop loss at Rs 98. We expect the stock to break out of the ascending triangle pattern and reach Rs 126 level in the short term.

Yoganand. D

(This article was published in the Business Line print edition dated November 15, 2007)
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