The stock of United Sprits skyrocketed 35 per cent on Monday, following the announcement of the Diageo deal. It ended the week with more than 31 per cent gains. Since bottoming out in March this year at around Rs 500, the stock has been on an intermediate-term uptrend. Last month, the stock took support at around Rs 1,00 and resumed its uptrend,decisively breaking through its key long-term resistance at Rs 1,600 levels.

However, the stock is currently testing subsequent key resistance at Rs 1,800. Its daily as well as weekly indicators are hovering in the overbought territory, implying a near-term corrective decline in the stock. Moreover, the stock is testing the upper boundary of Bollinger Bands, indicating overbought state.

Therefore, we are not ruling out a short-term down move to its immediate significant support at Rs 1,600. Next important supports are positioned at Rs 1,500 and Rs 1,300.

On the other hand, a decisive breakthrough of Rs 1,800 will accelerate the stock to Rs 1,900 and Rs 1,955 in the medium-term. Subsequent important resistances are placed at Rs 2,040 and Rs 2,160.

Bharti Airtel (Rs 301.1)

Bharti Airtel has surged 9 per cent with good volume last week. After taking the long-term support in the band between Rs 240 and Rs 250 in August 2012, the stock began to move sideways forming an ascending triangle pattern, which is a bullish reversal pattern in this scenario. Last week, the stock broke out of this pattern by decisively breaching its horizontal line at Rs 280.

On Friday, the stock advanced 3.5 per cent with good volumes after Bank of America Merrill Lynch upgraded it to ‘Buy’ from its previous ‘Neutral’ rating. However, the stock is currently testing key resistance and its 200-day moving average at Rs 300.

A strong jump above Rs 300 will strengthen the stock’s medium-term uptrend and take it higher to Rs 320 and to Rs 340 in the ensuing months.

Key long-term resistance above Rs 340 is at Rs 360. Inability to rally above Rs 320 will confine the stock trading in broad range between Rs 280 and Rs 320 for a while. Important supports below Rs 280 are positioned at Rs 260 and Rs 240.

(This article was published on November 17, 2012)
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