City Union Bank Ltd fell more than 16 per cent so far in 2021 compared to a 25 per cent upside seen in the Nifty50 in the same period.

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The stock has been a clear underperformer of 2021 but the formation of a double bottom pattern on the weekly charts suggests that we could see a bounce back towards Rs 163 in the next 3-4 weeks, suggest experts that translate into an upside of nearly 9 per cent from Rs 150 recorded on 10 December.  

A double bottom pattern looks like the letter ‘W’ on the technical charts. The pattern signals a possible change in the trend as the security price retested a support level twice and bounced back.

City Union Bank touched a 52-week high of Rs 190 on 17 December and since then it has been in a downtrend. The recent price action suggests that there could be some momentum building up in the stock.

The stock closed with gains of nearly 3 per cent on 10 December Friday, and for the week it closed with gains of nearly 4 per cent.

On the valuation front, the stock trades at a trailing 12-month, or TTM PE of 17.42x compared to sector PE of 30x. TTM refers to the past 12 consecutive months of a company's performance data used for reporting financial figures.

From a technical perspective, since August 21, the stock is hovering around its previous breakout zone of 140 levels which remains a major support zone.

“The weekly price action has formed an “Engulfing Bullish” pattern indicating short term trend reversal,” Rajesh Palviya, VP - Technical and Derivative Research at Axis Securities, said.

“On the weekly chart, the stock has confirmed “double bottom” formation. On the hourly chart, the stock has formed higher Tops and Bottoms indicating positive bias,” he said.

Palviya further added that the daily strength indicator RSI is in bullish mode along with positive crossover which supports strength in the near term. The above analysis indicates an upside of 157-163 levels. The holding period is 3 to 4 weeks.

(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.)