DCB Bank (₹173.9)



The outlook for the stock of DCB Bank is bearish. The stock fell 4.7 per cent on Wednesday breaking below the crucial 200-day moving average support at ₹178. This support was limiting the downside over the last couple of weeks. The fall on Wednesday was accompanied by strong volumes which leaves lesser possibility of any strong upward reversal in the near term. It also suggests that the downtrend that has been in place since June is intact and is likely to extend in the coming days.

A cluster of resistances are poised in between ₹178 and ₹181 which can cap the upside in the short term. An intermediate bounce to this ₹178-181 resistance region could find fresh sellers coming in to the market. Immediate support is at ₹170. A break below it can take the stock lower to ₹165. Inability to break below this support might trigger a temporary relief rally to ₹170 or ₹172. However, an eventual break below ₹165 will then increase the likelihood of the downtrend extending to ₹160 or even ₹155 thereafter.

Traders can go short. Stop-loss can be placed at ₹181 for the target of ₹160. Revise the stop-loss lower to ₹169 as soon as the stock moves down to ₹166. The downside pressure will ease only if the stock breaks above ₹182 decisively. Such a break can ease the downside pressure and take the stock higher to ₹185 and ₹190 thereafter. However, such a strong upmove breaking above ₹182 is less probable at the moment.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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