We recommend a sell in the stock of Andhra Bank from a short-term perspective. It is seen from the charts of the stock that its medium-term uptrend that started from its December 2011 low of Rs 79 had come to a halt by peaking out in March, at a high of Rs 138. Subsequently, the stock changed its direction triggered by negative divergence in daily moving average convergence divergence indicator. While trending down, the stock breached its 21- as well as 50-day moving averages in late April this year.
On Wednesday, the stock tumbled six per cent accompanied by high volumes, breaking through a key support level and its 200-day moving average, emphatically.
The daily relative strength index is featuring in the bearish zone and weekly RSI is on the verge of entering in to the bearish zone. The daily MACD is declining in line with the stock price and is featuring in the negative terrain, implying downward momentum. Both the daily and weekly price rate of change indicators are hovering in the negative zone, indicating selling pressure.
We are bearish on the stock from a short-term horizon. We anticipate its downtrend to prolong and touch our price target of Rs 101.5 or Rs 98.5 in the forthcoming trading sessions. Traders with a short-term perspective can consider selling the stock with stop-loss at Rs 108.
Since then the stock has been on a nascent medium-term downtrend.The selling pressure in the counter continued in the previous session, in which it fell four per cent, reinforcing the bearish momentum. It has retraced more than 50 per cent fibonacci retracement level of the prior uptrend.