From a 52-week low of Rs 10.52 on June 20 to a 52-week high of Rs 21.35 on Tuesday, shares of state-run UCO Bank rallied 103 per cent, only to see some selling pressure in Wednesday's trade. Technical analysts are mostly positive on the stock, following the two-year price breakout. While they do not rule out a short term correction towards Rs 18-16 levels, they said any such fall be buying opportunity.
They see immediate resistance for the UCO Bank stock at Rs 22 and have targets in the Rs 30-35 range, which is up to 80 per cent higher than the prevailing price.
On Wednesday, the scrip snapped a five-day winning streak and fell 5 per cent to hit a low of Rs 19.50 on BSE.
Independent analyst Manish Shah said UCO Bank has registered a two-year price break out. On the weekly chart, the scrip saw a range expansion candle, which is a major long-term trend reversal signal, he said.
"In terms of Wykoff theory, price is now in a markup phase. On the upside, price should see a rally to Rs 30-35 over course of next couple of months. As price has seen a sharp rally in last couple of days, any corrective decline within Rs 18-16 is a buying opportunity. This stock is a buy on declines with a stop below Rs 12," he said.
Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking said that buying demand emerged for UCO Bank from the major support area of Rs 10.
"The pullback rally thereon led prices to close marginally above the congestion zone, thus, offering a fresh entry opportunity with a favorable risk reward set up," he said.
Das said the stock has recently generated a breakout above the downward-sloping trend line from 2014 onwards.
"Previously there were multiple attempts to breach past the resistance zone of Rs 18-19 but it failed to do so. Currently, the breakout seems genuine as the volume trend has shown an accumulation indicating an increased enthusiasm to push prices higher. Immediate resistance is seen around Rs 23-23.50 as it happens to be the swing high of January 19, successive breach of which might extend the rally further towards Rs 32-33 in the near term. However, on the oscillator front, the stock is citing an overbought price condition, which might be a cause of concern in short term," he said.
Osho Krishan of Angel One noted that UCO Bank has witnessed a vertical rally from the level of Rs 14.50 and has gained over 45 per cent in the last couple of trading sessions. The stock has seen such traction after a long duration of consolidation, Krishan said.
"The trend seamlessly has changed, but post such a rally one should not rule out the potential of cool-off or correction in the counter. As far as levels are concerned, the support base has slightly moved upwards towards Rs 18-18.50, followed by 16. While the sturdy hurdle is placed near the Rs 22-odd zone, and a weekly closure above the same could only add a fresh leg to the rally. Hence, for the time being, we advocate to remain cautious in the counter."
Meanwhile, Amit Trivedi, CMT, Technical Analyst - Institutional Equities, YES Securities sees support for the stock at Rs 16. UCO Bank is a good stock from a positional point of view, he said adding that the levels of Rs 24-26 are possible on the upside.
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