Technical Stock Pick: Multibagger! This PSU stock doubled wealth in a year; what should investors do?

The PSU bank hit a fresh 52-week high of Rs 161.85 – a level last seen in December 2017. The stock remained flat in the past month but has risen more than 20% in the last 3 months.

It recently broke above from a rounding bottom pattern on the weekly charts last month. The neckline was placed around 150 levels. The stock closed at Rs 153 on 11 March 2024.

A rounding bottom is formed when the market sentiment shifts from bearish to bullish at a steady pace.


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The momentum helped the stock to rally more than 60% in the last 6 months and has increased more than 100% in the last 1 year, Trendlyne data showed.

The recent momentum has opened room for the stock to head towards 200 levels. Not just technical, but the fundamental picture of the stock also suggests strong upside momentum, suggest experts.

“Union Bank of India exhibits a bullish trend, supported by a rounding bottom pattern breakout and high volumes over the past six years,” Suraj Bathija, Founder & CSO at AlgoBulls, said.

“It's trading above various moving averages on the weekly chart, and its RSI suggests strong momentum. With an ATR of 11.5 at breakout, a low P/E ratio, and a healthy CASA ratio of 35.26%, the bank shows potential for profitability,” he said.

“It has seen significant profit and income growth over the past 3 years, along with robust credit growth and a healthy capital adequacy ratio (CAR) of 16.04%,” highlighted Bathija.

The daily Relative Strength Index (RSI) is placed at 65.5. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed. The daily MACD is above its center and signal Line, this is a bullish indicator.

In terms of price action, the stock is trading above 10,30,50,100, and 200-DMA on the daily charts.

“Traders can buy at the current market price of 156, targeting 230, with a stop loss at 132 in the coming quarter,” recommended Bathija.

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