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We recommend a sell in the stock of Central Bank of India from a short-term perspective. It is seen from the charts of the stock that after registering a life-time high at Rs 211 in November 2010, it peaked out. Since then it has been on an intermediate-term downtrend, forming lower peaks and lower troughs.
Both medium- and short-term trends of the stock are also down. In early August, the stock emphatically broke through its key support at around Rs 113 which later tuned into a significant resistance level. The stock failed to surpass this resistance last week and resumed its downtrend.
On Thursday, the stock fell 3.5 per cent accompanied with above average volumes, breaching its immediate support at around Rs 105. This decline has reinforced its downtrend. Moreover, the stock is trading well below its 21- and 50-day moving averages. Daily as well as weekly relative strength indices are featuring in the bearish zone. Besides, daily and weekly moving average convergence divergence indicators are also hovering in the bearish zone signalling downward momentum.
Our short-term outlook on the stock is bearish. We expect its decline to prolong until it reaches our price target of Rs 97 or Rs 94 in the upcoming trading sessions. Short-term traders can sell the stock while maintaining stop-loss at Rs 103.
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