Let's have a BEAR RIDE in UCO BANK.

It is an event when the underlying news on a scrip and the technicals are pointing in two different directions. The fundamental news is that the GOI is recapitalizing 7 PSU banks. Uco Bank is getting nearly Rs. 300 crores of the Rs. 1500 crores of money put out by the government.

• Now coming to the technical view on this stock. The short term moving average of 20-DMA is clearly over the long term moving average of 50-DMA, clearly the scrip is in mid term bullish phase.
• The ADX of the scrip is at 37.8 which shows the presence of a trend which is evident on the charts.
• There is however a divergence in the trade. The +DI & -DI both are currently in a downward move and this indicates that both the buyers and sellers are increasing which could have a sideways movement in the stock.
• The MACD line is at an inflection point. Any crossover of the MACD line below the Signal line would bring the shorts jumping over it. However any bounce back of the MACD line would lead to a failed signal and the prices would be rocketing northwards.
• The Slow Stochastic, which is a momentum indicator is suggesting has %K line and %D line both coming off the above 80 levels. This is also accompanied by the %k line below the %D line. It suggests that a negative momentum is build up in the scrip.
• We are bullish on the counter due to underlying news and bearish as indicated by technical indicators. We are expecting a large move in the prices of the scrip either way.

So our strategy should be to have a short position in the counter with a strict stop loss of 1%. Short positions could be initiated in this scrip in the trading range of Rs. 82.8-83.5 with a 1% stop loss at Rs.84.3.

Akash Singh, Technical Analyst [Akash@hbjcapital.com], HBJ Capital Services Pvt Ltd.