We recommend a sell in the stock of Vijaya Bank from a short-term perspective. It is evident from the charts of the stock that since peaking out after registering an all-time high at Rs 115 in early November 2010, the stock has been on an intermediate-term downtrend.

Medium-term trend is also down from its April high of Rs 93. Within this downtrend, the stock moved sideways over the past two months forming a descending triangle pattern with horizontal line at around Rs 64. Generally, this pattern is a bearish formation which occurs in a downtrend as a continuation pattern.

Reinforcing the down trend, the stock tumbled six per cent, penetrating its 21- and 50-day moving averages decisively on July 28. Furthermore, on Tuesday, the stock fell almost three per cent, emphatically breaching the horizontal line in this pattern.

Both daily and weekly relative strength indices are featuring in the bearish zone. Daily as well as weekly moving average convergence divergence indicators are hovering in the negative territory implying downward momentum.

Our short-term forecast on the stock is bearish. We anticipate its decline to continue until it reaches our price target of Rs 59.5 or Rs 57.5 in the approaching trading sessions. Traders with short-term perspective can consider selling the stock with stop-loss at Rs 63.5 levels.

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