The Hindu Business Line : PIVOTALS

RIL started the week on a negative note, tumbling 7 per cent on June 15. The counter plunged 13 per cent over the week, conclusively breaking through a key medium-term support level at Rs 2,100. We believe that the stock has reversed lower. The negative divergence in the weekly oscillator and penetration of the intermediate-term up trend line supports the reversal. The immediate key support for the stock is at Rs 1,975 (a floor of gap occurred this point in mid May) and Rs 1,850 in the days ahead.

If the stock fails to sustain above Rs 1,975, it can dive to the next support level or even lower. Fresh long positions are recommended only on a positive close above Rs 2,200, with target at Rs 2,350.

SBI (Rs 1,724.2)

After taking support in the range of Rs 1,600 and Rs 1,620, the stock witnessed a corrective up move. However, the medium-term trend will be down for SBI as long as it trades below Rs 1,840. Failure to move beyond this level will pull the stock again to Rs 1,600 or Rs 1,537. Short positions can be initiated on a reversal from Rs 1,840 with tight stop.

On the contrary, if the stock closes above Rs 1,840, it can rally to the next resistance at Rs 1,935 in the medium-term.

Tata Steel (Rs 411.7)

The stock’s rally from March low appears to have halted, after encountering significant long-term resistance in the band of Rs 460 and Rs 500. The hanging man candlestick pattern in the weekly chart indicates medium-term reversal. Moreover, a 9 per cent weekly loss in Tata Steel confirms that it has reversed. As the stock reversed from Rs 460, which is a 38.2 per cent retracement of the down-move from November 2007 peak, we believe that the long-term down trend from January 2008 peak has resumed. Following a small pause around Rs 400, the stock can decline further. Medium-term traders can initiate short positions once the stock slips below Rs 380, with a stiff stop. Medium-term targets for the stock are Rs 347 and Rs 300.

Infosys (Rs 1,771.1)

Reinforcing the bullish momentum, the stock made a weekly close above Rs 1,750. However, the counter is facing its key long-term resistance at Rs 1,800. We don’t envisage a move beyond this level in the near-tern. The stock is likely to move sideways in the range of Rs 1,700 and Rs 1,800 in the days head. Medium-term investors can stay invested as long as the stock trades above Rs 1,672. Nevertheless, fresh long position can be initiated if the stock breaks through Rs 1,854, with a medium-term target of Rs 2,000. Short-term supports for the stock are at Rs 1,672 and Rs 1,600.

ONGC (Rs 1,010)

The counter conclusively broke-out of the sideways consolidation range between Rs 1,070 and Rs 1,190 by crashing 5 per cent on June 17. The selling interest continued on the subsequent trading session and it fell another 5 per cent. However, this decline found temporary support at the intra-week low of Rs 973. Since May peak of Rs 1,218, ONGC has been on a short-term down trend. Short-term traders can initiate new short-positions if the stock dives below Rs 980. Near-term targets for the stock are Rs 920 and Rs 880. The immediate resistances are pegged at Rs 1,040 and Rs 1,085.

Maruti Suzuki (Rs 1,047.3)

Maruti Suzuki has been on an intermediate-term up trend since its January low of Rs 428, forming higher peaks and troughs. However, after recording a 52-week high of Rs 1,120 on June 12, the stock commenced its decline. Short-term view on the stock calls for caution. A short-term correction up to Rs 1,000 can’t be ruled out in the up coming sessions. Medium-term investors can stay invested as long as the stock trades above Rs 950. Key support and the resistance for the week are at Rs 875 and Rs 1,100 respectively. — Yoganand D.

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