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We recommend a sell in the stock of IDBI Bank from a short-term perspective. It is evident from the charts of the stock that since November 2010 peak of Rs 202, the stock has been on an intermediate-term downtrend. Moreover, after encountering resistance at Rs 123 in late April, the stock resumed its downtrend. While trending downward, the stock conclusively breached its 200- and 50-day moving averages and is trading well below them. The stock has also penetrated its key support at Rs 140 in late April. Reinforcing the downtrend, the stock fell by three per cent with above average volumes on May 23.
The daily relative strength index has re-entered into the bearish zone from the neutral region and weekly RSI is on the verge of entering in to the bearish zone. Both daily as well as weekly moving average convergence divergence indicators are featuring in the negative territory indicating downward momentum.
We are bearish on the stock from a short-term perspective. We expect its decline to continue until it reaches our price target of Rs 125 or Rs 121 in the approaching trading sessions. Traders with short-term horizon can sell the stock while maintaining stop-loss at Rs 133.
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