Indian Overseas Bank

We recommend a sell in Indian Overseas Bank stock from a short-term trading perspective. It is apparent from the charts of Indian Overseas Bank that it has been on a long-term downtrend from its January 2008 peak of Rs 228. Since then, the stock has been forming lower peaks and lower troughs. Moreover, the intermediate and medium-term trend also is down.

On February 2, the stock penetrated a key support level at Rs 60 by declining 3 per cent that reinforced the downtrend. The stock is experiencing heavy selling pressure over the past three trading session. The stock is trading well below its 21 and 50-day moving averages. Both daily and weekly relative strength indices (RSI) are featuring in the bearish zone.

The daily moving average convergence and divergence is also indicating a sell and is hovering in the negative territory. Considering that the intermediate-term downtrend is intact, we are bearish on the stock from a short-term. We expect the decline to continue until it hits our price target of Rs 45.5. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 54.