Oriental Bank - BUY

We recommend a buy in Oriental Bank of Commerce from a short-term horizon. It is clearly apparent from the charts of Oriental Bank of Commerce that following an intermediate downtrend from January peak of Rs 321, it found support at the early July low of Rs 122 and began to consolidate sideways. In October, the stock took support at around Rs 122, a significant support level and bounced upward.

We notice that the stock’s recent bounce appears to be the second bottom of a double bottom (bullish reversal) pattern. A bullish divergence in the daily relative strength index (RSI) supports the stock’s recent reversal. The daily RSI is rising in the neutral region and the weekly RSI is also behaving similarly. The moving average convergence and divergence (MACD) is signalling a buy, supporting our view.

We are bullish on the stock from a short-term horizon. We expect the stock’s upmove to prolong until it hits our price target of Rs 164. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 140.