Indian Overseas Bank

We recommend a buy in Indian Overseas Bank from a short-term trading perspective. It is clearly visible from the charts of Indian Overseas Bank that after encountering significant resistance in the band of Rs 80-85 in early January 2009, it began to decline.

The stock conclusively penetrated a support at Rs 60 in late January and was on a medium-term downtrend till early March low of Rs 37. This low is also a 52-week low. It reversed from this level and has been on a medium-tem uptrend since then.

The stock broke above its medium-term down trend-line and 21-day moving average in late March and continued its up move. On April 9, the stock breached its 50-day moving average, gaining 3 per cent.

We notice that there is an increase in volume for the past two trading sessions. The daily relative strength index (RSI) has entered in to the bullish zone and the weekly RSI is on the brink of entering in to the neutral region from the bearish zone. Moreover, the daily moving average convergence and divergence indicator is likely to enter positive territory. We are bullish on the stock from a short-term perspective.

We anticipate it to move up until it hits our price target of Rs 58. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 49.