Buy Union Bank of India; target of Rs 245: ICICIdirect

ICICIdirect.com's report on Union Bank of India (UBI)

The Nifty continues to make record highs on expectations of a further improvement in macroeconomic indicators. Near the November expiry, the market started to move up on the back of broad based participation, which was missing earlier. PSU banking is one such space, which has started to perform recently.

After seeing a strong run in PSU banking heavyweights like SBI, Bank of Baroda and Punjab National Bank, money flow was also seen in stocks like Union Bank. With falling crude prices, a cool-off of bond yields and expectation of a reduced interest rate scenario, the PSU banking space is one to focus on in the coming months for strong upside potential

Since July, Union Bank has been broadly consolidating in the range of Rs 190-220. During this five month period, the OI in the stock reduced 40% as the stock entered into consolidation and directional traders avoided the stock. However, near November expiry, the stock saw long additions in the December series. The OI in the last couple of sessions as the stock bottomed out near Rs 200 levels has increased 20%. This suggests long bias was again created in the stock.

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