We recommend a sell in the stock of IDBI Bank from a short-term perspective. It is evident from the charts of the stock that since November 2010 peak of Rs 202, the stock has been on an intermediate-term downtrend. Moreover, after encountering resistance at Rs 123 in late April, the stock resumed its downtrend. While trending downward, the stock conclusively breached its 200- and 50-day moving averages and is trading well below them. The stock has also penetrated its key support at Rs 140 in late April. Reinforcing the downtrend, the stock fell by three per cent with above average volumes on May 23.

The daily relative strength index has re-entered into the bearish zone from the neutral region and weekly RSI is on the verge of entering in to the bearish zone. Both daily as well as weekly moving average convergence divergence indicators are featuring in the negative territory indicating downward momentum.

Our Recommendation

We are bearish on the stock from a short-term perspective. We expect its decline to continue until it reaches our price target of Rs 125 or Rs 121 in the approaching trading sessions. Traders with short-term horizon can sell the stock to re-enter around 125 levels for a target of 142

The folllowing chart shows the returns over a period of 1 year horizon indicating clearly the support and resistance levels

Time Span Price Change %Change
Today 135.35 0.60 0.44
Week 133.50 1.25 0.93
Month 131.45 3.30 2.51
Three Months 147.95 -13.20 -8.92
Six Months 146.45 -11.70 -7.98
One Year 125.70 9.05 7.19

The best strategy is to buy low and sell on a gain of 20% on your investment over a period of 2-3 months

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