The Hindu Business Line : Reliance (Rs 2,356.8)

Despite the wobble on Monday, RIL closed the week with 6 per cent gain. Though the stock closed marginally above the short-term resistance at Rs 2,343, the break-out is not convincing enough. Fresh long positions are advised only on a move above Rs 2,400. If the rally continues in the early part of next week, the upward targets are Rs 2,414 and Rs 2,561.

Conversely a weak start on Monday will drag the stock lower to Rs 2,104 or Rs 1,935. We continue to advise caution from a medium-term perspective unless the stock closes above Rs 2,384. The third wave down from the recent peak at Rs 2,535 can be quite sharp and severe.

State Bank of India (Rs 1,637)

State Bank faltered at Rs 1,800 again and declined below our second short-term target to end with 10 per cent weekly loss. The modified evening star pattern in the weekly candlestick chart signals a medium-term reversal in the stock and we stay with the view that a decline to Rs 1,537 or Rs 1,300 is possible over this time-period.

The near-term view for SBI is weak too and it can decline to Rs 1,537 or Rs 1,450 (where the 50-day simple moving average is positioned) over the next two weeks. Rallies will face resistance at Rs 1,700 or Rs 1,740. Short-term traders can initiate short positions on a reversal from either of these levels.

Tata Steel (Rs 455.8)

Tata Steel moved in line with our expectation, declining to the short-term support at Rs 410 and reversing sharply from there. But the up-trend from this level is tentative implying that the stock could chart a sideways correction between Rs 400 and Rs 500 for a few more weeks. Supports on a decline below Rs 400 are at Rs 365 and Rs 330.

The long-term 200-day moving positioned at Rs 240 will be the key medium-term support for the stock. The need for caution from a medium-term perspective arises from the fact that 38.2 per cent retracement of the down-move from November 2007 peak occurs at Rs 460. A reversal from here can cause resumption of the long-term down move from January 2008 peak.

Infosys (Rs 1,727.9)

Though Infosys moved above the resistance at Rs 1,706 to the intra-week peak of Rs 1,854, the stock could not sustain at those levels and ended the week with marginal 2 per cent gain. The star with long upper shadow formed in the weekly candlestick chart reflects the selling pressure that Infosys is experiencing around Rs 1,850. The outlook for this stock stays indecisive. A strong close above Rs 1,750 will pave the way for a rally to Rs 1,900 over the medium term.

On the other hand, failure to record a weekly close above Rs 1,750 can make the stock decline to Rs 1,560 or Rs 1,370 over the medium-term. Stop for medium-term investors can therefore be at Rs 1,540. Resistances for the week would be at Rs 1,800 and Rs 1,854. Investors can initiate fresh shorts on a failure to move above the first resistance.

ONGC (Rs 1,126.8)

ONGC moved sideways in the band between Rs 1,070 and Rs 1,190 last week. Key intermediate term resistance for the stock is at Rs 1,100. That the stock is holding above this level is a positive from a medium term perspective. Sideways move between Rs 1,050 and Rs 1,250 will be a precursor to a rally towards the stock’s previous high of Rs 1,387. Short-term investors can, therefore, hold the stock with a stop at Rs 1,050. Next support for the stock is at Rs 960.

— Lokeshwarri S.K.

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