Todays Pick - Union Bank of India

We recommend a buy in Union Bank of India from a short-term perspective. From the charts of Union Bank of India, we see that the stock was on a medium-term down trend from Rs 230 to Rs 130 (between early January and mid March 2008).

However, the stock is in a steady up-move since this trough. During this up move, the stock penetrated the 21 and 50-day moving averages and it has been forming higher peaks and higher bottoms. The daily momentum indicator is on the verge of entering the bullish region. Besides the daily moving average convergence and divergence has entered the positive zone indicating bullishness.

Our short-term outlook for the stock is bullish. We anticipate the stock’s medium-term uptrend to continue to our price target of Rs 191 in the upcoming sessions. Investor with short-term perspective can buy the stock, while keeping the stop-loss at Rs 159 level.