Technical Analysis

Stock query: Bank of India in a sideways movement

Yoganand D | Updated on December 08, 2019 Published on December 08, 2019

Could continue to remain range-bound between ₹60 and ₹75 in the short to medium term

Here are the answers to readers’ queries on the performance of their stock holdings.

Please throw some light on Bank of India. For a long time, it has been hovering between ₹60 and ₹70. Is it a good time to buy this stock?

Pradeep Kumar

Bank of India (₹68.3): The stock of Bank of India is in a downtrend across all-time frames — long, medium and short term.

After registering a 52-week low at ₹57 in early October, it started to move sideways in a wide range between ₹60 and ₹75. Recently, the stock had encountered a key long-term resistance at around ₹75 and began to decline.

On Friday, it tumbled 4.4 per cent, breaching its 21-day moving average. With this fall, the short-term trend has turned bearish for the stock. The daily relative strength index (RSI) is on the brink of entering the bearish zone from the neutral region, and the weekly RSI features in the neutral region.

Besides, the daily as well as the weekly price rate of change indicators are featuring in the negative territory, implying selling interest. The stock can continue to remain range-bound between ₹60 and ₹75 in the short- to-medium term.

A fall below the immediate support level of ₹65 can pull the stock down to the lower boundary at ₹60. An emphatic fall below this level can drag the stock lower to ₹55 and then to ₹50 in the medium term. On the other hand, a strong rally above the upper boundary of ₹75 can pave way for an up- move to ₹85 and then to ₹90.

A strong break above ₹90 can accelerate the stock higher to ₹100 or ₹105 levels in the long term. You can avoid taking fresh positions as long as the stock is range-bound between ₹60 and ₹75.

Probably, you can consider buying above ₹75 with a long-term stop-loss at ₹65.

I hold shares of NBCC. I want to exit at an opportune moment by minimising the loss to the extent possible.

S Natarajan

NBCC India (₹34.3): Since marking a 52-week low at ₹28.5 in late August, the stock has been in a sideways consolidation phase in a broad range between ₹30 and ₹40. On Friday, it tumbled 4 per cent with good volume. As the short-term outlook is bearish, you can consider exiting in rally. The stock has the potential to trend downwards and test the key support at ₹30.

A further decline below ₹30 can drag the stock to ₹26 and then to ₹22 in the medium term.

The key resistances above ₹40 are at ₹45 and ₹50.

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Published on December 08, 2019
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