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We recommend a buy in the stock of United Bank of India from a short-term horizon. It is evident from the charts of the stock that it has been in a medium-term uptrend from its September trough at around Rs 50, shaping higher peaks and troughs. In late November, the stock decisively broke out of a key resistance at Rs 70 with good volume and continued to trend upwards. Further, on Monday, the stock gained 5.8 per cent accompanied by extraordinary volume breaking through a significant long-term resistance at Rs 77.
The stock is hovering well above its 50- and 200-day moving averages. This up move has strengthened the stock’s bullish momentum. The daily relative strength index has re-entered the bullish zone from the neutral region and weekly RSI is featuring in this zone. Both daily and weekly moving average convergence divergence indicators are hovering in the positive territory.
With the stock’s medium-term uptrend-line intact and the recent breakthrough of key resistance, we are bullish on the stock from a short-term perspective. We anticipate its rally to maintain and reach our price target of Rs 83.5 or Rs 85.5 in the forthcoming trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 78.70 levels.
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