Investors with a short-term trading perspective can buy the stock of Lakshmi Vilas Bank. This stock was consolidating in a wide band between Rs 70 and Rs 90 since last September. The fact that the stock has given back only one-third of the gains recorded since March 2009 implies that the medium-term outlook is positive for this stock. It is forming a symmetric triangle over the last nine months. This is a continuation pattern within an uptrend.
The short-term trend in the stock is up since May 25. On Monday, the stock closed above the key resistance at Rs 87 accompanied by strong volumes. Momentum indicators in the daily chart are positioned in the bullish zone. Both 10-day rates of change oscillator as well as the daily moving average convergence divergence oscillator are beginning to move above the zero line. The 14-day relative strength index has moved to 65, is also in the bullish zone.
The stock could move higher to Rs 90.6 and Rs 95.2 in the days ahead. Short-term investors can buy the stock with stop at Rs 85.
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