Market Strategy

Pivotals: Reliance Industries (Rs 981.7)

Yoganand D. | Updated on March 05, 2011





In the midst of last week's volatility, the stock advanced 1.6 per cent for the week. It has been trading range bound, between Rs 955 and Rs 1,010 since February 22.

Short-term traders should tread cautiously as long as RIL remains trading in the mentioned range.

Fresh long position is recommended only if the stock conclusively moves beyond Rs 1,010. Upside targets for the stock are Rs 1,040-1,050. Its next resistance would be at Rs 1,080 in the upcoming weeks.

On the other hand, a downward break, through the sideways range, will pull the stock down to Rs 935 and Rs 900.

Support below this level is at Rs 885. The stock continues to move sideways in the broad range between Rs 880 and Rs 1,160 in the medium-term.

State Bank of India (Rs 2,700.2)

SBI jumped 4.5 per cent last week. It is currently facing key resistance at Rs 2,755 level (200-day moving average is poised around this level). Short-term traders can initiate fresh long position if the stock breaches this level, but with stiff stop-loss.

In that case, the stock can rally to Rs 2,825 and to Rs 2,885.

Inability to breach this resistance levels will drag the stock down once more to Rs 2,650 first and then to Rs 2,550.

Medium-term trend remains unaltered and is down since last November.

A conclusive close below the significant support level at Rs 2,500 will be a resumption of the downtrend and can pull the stock lower to Rs 2,200 or to Rs 1,900 in the weeks ahead. However, a strong move above Rs 3,000 will mitigate this downtrend.

Tata Steel (Rs 617.6)

In line with out expectations, the stock moved higher and achieved our first target level of Rs 635 on March 1. The stock subsequently gave up some of its gains and finished the week gaining 1.5 per cent.

We observe the formation of a spinning top candlestick pattern in the weekly chart. This signals indecisiveness. Moreover, the stock has confined its trading range between Rs 590 and Rs 660 over the past seven weeks. The upcoming weeks are therefore crucial from a medium-term perspective. An emphatic fall below Rs 590 will be a threat to its medium-term up trend. In that scenario, the stock can decline to Rs 550 or even to Rs 520 in the medium-term.

Nevertheless, upward break through Rs 660 will reinforce its uptrend and give a target of Rs 700.

Short-term traders should be cautious during the upcoming week. Immediate supports are at Rs 600 and Rs 590. Resistance for the week are pegged at Rs 640 and Rs 660.

Infosys Technologies (Rs 3,062.9)

Taking support from Rs 3,000, Infosys bounced up 2 per cent last week. Short-term traders can initiate fresh long position while maintaining stiff stop-loss at Rs 3,000.

Targets are at Rs 3,130, Rs 3,160 and Rs 3,200.

Failure to move beyond the second target will signal profit-taking.

However, a strong tumble below the key support of Rs 3,000 will drag the stock down to Rs 2,950 and to Rs 2,800 levels.

Published on March 05, 2011

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