The Hindu Business Line : Bullish trend in SBI

SBI (Rs 924): The recent price pattern has not negated the view of a rally to Rs 1,050-Rs 1,100. Only a close below Rs 860 would invalidate the bullish view.

This is one of our top technical picks from the banking space. Long-term investors may accumulate this stock, with a stop-loss at Rs 860. Exposures may also be enhanced on weakness, with the same stop-loss. A close below Rs 860 would result in a drop to Rs 800-Rs 805. The rally towards the target zone would, however, commence subsequently.

Reliance Ind (Rs 886): The lacklustre financial performance for the quarter-ended December 2005 imparted a bearish trend during the week. Though the stock dropped below the stop-loss level at Rs 885 on Thursday, it managed to close above it. The recent price pattern suggests that the stock could drop to the Rs 835- Rs 840 range. Though the stock still has upside potential, a fresh leg of a rally would take shape only on the completion of a corrective phase.

Investors who have entered at relatively lower levels may take partial profits. Fresh exposures may be deferred. Stop-loss for long positions may be placed at the negative trigger level of Rs 860.

Tata Steel (Rs 367): The stock is still moving within the confines of a trading zone. Though it has managed to hold above our stop-loss level of Rs 365, this level is unlikely to hold for long. A breach of this level appears likely and a drop to Rs 335-Rs 340 may be on the cards. Look to reduce exposures. Short positions may be considered, with a stop-loss at Rs 376.

Satyam Computer (Rs 739): The near-term outlook does not appear positive. A drop to Rs 700-Rs 705 appears likely. A close above Rs 770 is a minimum requirement to reinstate a positive trend. Investors may look to reduce exposures. Fresh exposures may be considered on the evidence of support at Rs 685-690. A rally to Rs 800-Rs 810 is unlikely to resume before the completion of the short-term corrective phase.

Infosys (Rs 2,846): The price action was not in line with expectations. The stock ruled weak and also dropped below the stop-loss level at Rs 2,940. As it is normally the case, the momentum picked up on the breach of the stop-loss level and the stock dropped sharply on Thursday. The company reported its quarterly performance on Wednesday, which was a market holiday. Disappointed with the performance, the stock opened with a huge downside gap on Thursday. Though this gap is likely to be filled by a short-term recovery towards Rs 2,960, there appears to be downside extending up to Rs 2,690-2,700. Look to reduce exposures.

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VSNL (Rs 375.2): Contrary to expectations, the stock ruled weak during the week gone by. In the process, the stop-loss level of Rs 379 was breached and the stock appears to be headed towards Rs 355-360.

The recent drop does not, however, negate the long-term positive outlook. As observed last week, the stock appears to be headed towards Rs 455-460 shortly. The move towards this zone would commence on the completion of the short-term downtrend. The anticipated downtrend would qualify as a correction to the recent recovery from the low of Rs 260. Investors who have entered at fairly lower levels may hold with a stop-loss at Rs 355. Fresh exposures may be considered on the evidence of support at Rs 355-360, with a stop-loss at Rs 345.

Kirloskar Oil Engines (Rs 213): The stock ruled firm as anticipated last week. After moving to a high of Rs 222, the trend turned bearish in the last couple of days. The move towards the target zone of Rs 265-270 would start on the completion of the short-term corrective phase. The positive view would be valid as long as the stock holds above Rs 160. Having a stop-loss at Rs 160 would not be prudent from a money management perspective. Investors may, therefore, settle for a stop-loss at Rs 190. Fresh exposures may also be considered on weakness, with the same stop-loss.

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