The stock fell 1.3 per cent in the previous week and is testing our first support level at Rs 770. Short-term traders should remain cautious in the week ahead and enter fresh long positions only if the stock rallies above Rs 790 with same as stop-loss. In that case, the stock can rally to Rs 815 and then to Rs 830 in the forthcoming weeks. Immediate significant support is at Rs 750.

Medium-term trend has been up for the stock since the May trough at Rs 671. Investors with a medium-term perspective can prolong their long holdings as long as the stock trades above Rs 742. A tumble below Rs 742 can drag the stock down to Rs 710 in the medium-term.

Infosys (Rs 2,373.2)

Infosys slipped almost 3 per cent last week. However, this decline appears to be a corrective move for the stock’s strong rally witnessed before. It has been in a short-term uptrend from the July low at Rs 2,101. Traders can consider accumulating the stock during the correction while maintaining stop-loss at Rs 2,310. An upward resumption can take the stock higher to Rs 2,424 and then to Rs 2,470 in the short-term.

The stock has an important resistance band between Rs 2,500 and Rs 2,540. Strong move above this band is required to take the stock northwards to Rs 2,600 in the medium-term.

Conversely, a decline below Rs 2,300 will pull the stock lower to Rs 2,270 and Rs 2,200 in same time frame. Key supports below Rs 2,200 are positioned at Rs 2,150 and Rs 2,100.

State Bank of India (Rs 1,845)

The stock fell by 2.6 per cent last week. It is hovering just above its key support at Rs 1,800. Traders should be extremely cautious as long as the stock trades above Rs 1,800. Fresh short positions are recommended only if the stock declines below this support with same as stop-loss.

In such a scenario, the stock’s medium-term downtrend that has been in place since its February 2012 peak at Rs 2,474 will be reinforced and it can decline to Rs 1,715 and then to Rs 1,600.

An emphatic rally above Rs 1,950 can push the stock higher to Rs 2,000 or to Rs 2,060.

But, the stock has to decisively rally beyond Rs 2,100 to alter its short-term downtrend and take it higher to Rs 2,200 levels.

Tata Steel (Rs 362.5)

Tata Steel nose-dived 6.5 per cent accompanied by good volumes last week. This decline has strengthened the stock’s medium-term downtrend that has been in force since its February peak of Rs 500.

The stock is hovering well below its 50 and 200-day moving averages. Its short-term trend is also down.

Traders can prolong holding their short positions with stop-loss at Rs 374. Downside targets for the stock are at Rs 350 and Rs 335.

On the other hand, strong jump above Rs 380 will lead to a corrective up move to Rs 390 or to Rs 400. Subsequent important resistance is between Rs 425 and Rs 430.

(This article was published on September 1, 2012)
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