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The outlook for the stock of Federal Bank is positive. The stock opened above the 200-DMA at around ₹53.5 on Tuesday and surged 5.5 per cent. The sharp reversal after an intraday dip from this 200-DMA suggests strong buying interest at lower levels. Also, Tuesday’s sharp rally was accompanied by strong volumes. Moreover, this rally has breached the 38.2 per cent Fibonacci retracement resistance at ₹55.9. This adds strength to the bullish view.
The 200-DMA will continue to remain a key support. Above this support, a rise to ₹60 or ₹61 is possible in the near term. A further break above ₹61 can take the stock to the next target of ₹63. Traders with a short-term perspective can go long. Stop-loss can be placed at ₹53 for a target of ₹62. Accumulate longs on dips near ₹54. Revise the stop-loss higher to ₹58 as soon as the stock moves up to ₹60. The outlook for the stock will turn negative only if it declines below the 200-DMA.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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