Canara Bank rallied by about 70 per cent in the last 1 year compared to 26 per cent rise seen in the Nifty50 but the PSU bank lost momentum in November when shares fell over 20 per cent from the high.

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Theoretically, a stock is said to be in bear territory when the price falls 20 per cent or more from the recent high. It is an indicator of negative sentiment.

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Shares of Canara Bank fell from the 52-week high of Rs 247.60 recorded on 9 November to hit a low of Rs 195.15 on 29 November that translates into a fall of 21 per cent.

The PSU bank is now showing signs of recovery. On the weekly charts, the prices have taken support at a 200-week moving average which also confluences with the 50% Fibonacci retracement level of the rise from 142– 247 levels after the recent 20% correction.

Experts are of the view that the stock has formed a ‘Morning Star’ pattern on the weekly chart hints at a possible reversal in the stock price. The momentum could take the stock towards 245-277 that translates into an upside of 16-30 per cent from Rs 211 recorded on 15 December in the next 2-3 months.

A Morning Star is a 3-candlestick pattern in which the first candle is a tall red candle, followed by a small red or a green candle with a short body, and finally a green or a white candle which marks a possible reversal.

“Canara Bank is starting the next leg of up move after a correction. The technical parameters and the indicators mentioned above, point towards the possibility of increasing bullish momentum in the trend,” Pushkaraj Kanitkar, VP (Equities) at GEPL Capital Pvt Ltd, said.

“We expect this momentum to take the prices towards 245 (Previous Swing High) followed by 277 (Multiple Touch Points and 78.6% extension level of the rise form 142-247 projected from 194) and eventually towards the 300 (100% extension level of the rise form 142-247 projected from 194),” he said.

On the downside, the 200-mark will act as a support zone. If this zone is breached, our bullish view will be negated Kanitkar said that we might see the prices move lower.

Traders can look at buying Canara Bank at current levels with a target of 245 and 277 with a strict stop loss of 200 on closing basis, recommended Kanitkar.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)