Union Bank of India (Rs 222.10): Sell

We recommend a sell in the stock of Union Bank of India from a short-term horizon. It is evident from the charts of the stock that its intermediate-term uptrend that started from its August 2012 low of Rs 150 came to an halt at around Rs 288 in early January this year. Thereafter, the stock changed its direction and began to decline triggered by negative divergence in daily relative strength index and moving average convergence divergence indicator.

The stock has been in a short-term downtrend since its January peak. It decisively breached its intermediate-term uptrend line and 50-day moving average in late January. Last week, the stock conclusively breached its key support at Rs 230 by declining 4 per cent. Further, the stock fell a further 2.5 per cent reinforcing its downtrend in the previous session. The stock is hovering well below its 21- and 50-day moving averages.

The daily RSI is featuring in the bearish zone and weekly RSI is sloping down into the neutral region. The daily MACD is trending down in line with the stock price and has signalled a sell. Our short-term forecast on the stock is bearish. We anticipate its downfall to prolong and reach our price target of Rs 215.5 or Rs 212 in the upcoming trading sessions. Traders with a short-term perspective can consider selling the stock with stop-loss at Rs 225.5 levels.