ETMarkets Smart Talk: Up over 54% in a week, UCO Bank stock can continue to rise: Osho Krishan

After last week’s impressive rally which took UCO Bank stock higher by over 54%, Angel One’s technical analyst Osho Krishan says the support base has slightly moved upwards towards the Rs 24 zone. “At present, the stock has a cluster of resistance at the higher zone starting from Rs 32 to 44. Looking at the recent price action, the stock is likely to continue its northward journey, but one needs to remain cautious in the counter and should trail profits with strict trailing stop loss,” he says. Edited excerpts from an interview:

Given the selloff seen in the last two days, what should be the strategy for Monday? Do you see Nifty's support shifting lower?
The benchmark index Nifty has now sneaked below the key swing low of 18,350 on a closing basis. Ideally, looking at the price structure, the development does not augur well for bulls. A close below this support opens the possibility of an extended correction in the coming week. We may be biased, but we are still not convinced with this close. Only a follow-through selling may lead to further weakness towards 18130 - 18000 - 17900 in coming sessions. Even if this scenario pans out, we do not expect the correction to aggravate below the lower end of this support range. The higher degree up trend remains intact as long as we manage to hold this. Since the market was deeply overbought, we must consider this as a running correction.

For Nifty Bank traders, what are the key levels to watch out for?
On the technical front, the cycle of higher highs – higher lows is still intact, but the narrowing down of the momentum signifies the tiredness in the bulls. As far as levels are concerned, 43000-42800 is the intermediate support, followed by the sacrosanct support of the unfilled gap placed around 42550-42500. On the flip side, 43650-43700 is likely to act as immediate resistance, breaching which the index is expected to reclaim its lifetime high zone in the comparable period. At present, the index is placed at a crucial level, and one needs to keep a close tab on the mentioned levels for the time being.

A number of PSU banks gave double-digit returns during the week with UCO Bank going up by about 54%. What are the charts saying about how the stocks may perform in the coming week?
UCO Bank has witnessed a vertical rally from the level of Rs 14.50 and has gained over 130 percent in the last couple of trading weeks. The stock has surged in line with the rally in the PSU banks and has generated a massive return in a nudge of a time. 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 the Rs 24 zone. At present, the stock has a cluster of resistance at the higher zone starting from Rs 32 to 44. Looking at the recent price action, the stock is likely to continue its northward journey, but one needs to remain cautious in the counter and should trail profits with strict trailing stop loss.

If the sell-off deepens further, do you think it is better to stay away from the broader market?
The primary trend remains bullish and post the recent strong rally from the levels of 17000 odd zone, one need not worry about minor blips. Price-wise correction should be considered healthy as it construes a higher base formation before the unfolding of the fresh leg of the rally. Also, we do not expect the correction to aggravate below the key support zone of 18000-17900. Also, the broader space has recently started gaining traction, and we expect the same to continue in the near future.

Which are the 3-4 stocks that would be on your radar for the week?

Balrampur Chini Mills

The stock has seen a strong breakout in the last trading session on the back of robust volumes and has surged above the 200 SMA, indicating inherent strength in the counter. The stock is likely to witness a strong follow-up move in the comparable period. (SL: 380 | TGT: 415-420)

VBL
It is in a secular uptrend and is hovering near its lifetime high levels. Also, on the technical front, the stock is looking lucrative and has the potential to continue its upward journey. (SL: 1338 | TGT: 1540)

Sterlite Tech
The stock has seen a significant move in the last session, backed by robust volumes, indicating inherent strength in the counter. The price action construes a positive development in the counter, and it is likely to continue its up move. (SL: 176 | TGT: 200)

All Cargo Logistics
Ir has witnessed a bullish engulfing candle on the weekly chart, followed by a positive crossover on the technical indicator, which construes a positive setup for the counter. Also, the stock firmly withheld its higher highs structure, adding up to the bullish quotient. (SL: 420 | TGT: 472)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)