Technical Analysis

High Five

YOGANAND D | Updated on March 23, 2014 Published on March 23, 2014






SBI (₹1,702.4)

Though the stock gained 3 per cent in the previous week, it is still testing key resistance at ₹1,700. A strong breakthrough of this resistance is needed to alter the stock’s medium-term downtrend and take it higher to ₹1,800 and ₹1,900 in the coming weeks. But the indicators on the daily chart are showing signs of negative divergence, meaning that a short-term trend reversal is on the cards. Therefore, traders with a short-term perspective should initiate long positions only on a strong break of the resistance with a stop-loss at ₹1,700. Investors with a medium-term perspective can take the cue on such a breakout and go long with stop-loss at ₹1,600.

ITC (₹356.7)

ITC climbed another 2.8 per cent in the previous week and reached the price target of ₹355. Since the February low of ₹311, the stock has been on a short-term uptrend. It is trading way above its 50- and 200-day moving averages. Nevertheless, the stock is now testing a significant resistance in the band between ₹355 and ₹360. Traders with a short-term perspective should desist from trading in this stock as long as it is testing the resistance band. The inability to rally above ₹360 can pull the stock down to ₹345 or to ₹335 in the short term. Only a clear breakthrough of this band will be a cue for initiating fresh long position.

Infosys (₹3,293)

The stock’s slide continued in the previous week too, declining almost 3 per cent. It is hovering above a key support band between ₹3,200 and ₹3,250. Moreover, its 200-day moving average is poised at ₹3,200. The stock’s short-term downtrend can come to a temporary halt at this support zone. Traders can avoid trading in the stock as it is volatile and the short-term trend is in a trend-deciding area. Important resistances to watch out for are positioned at ₹3,400 and ₹3,500 levels. An emphatic dive below ₹3,200 will reinforce the stock’s short-term downtrend and pull it down to ₹3,100 or even ₹3,000.

Reliance Ind (₹888.3)

RIL was choppy and closed the previous week on a marginally positive note. Testing the significant resistance zone in the range between ₹890 and ₹900, the stock reversed lower. Traders should continue to tread with caution in the coming week also. A strong breakthrough is required to accelerate the stock northwards to ₹925 in the near term. However, failure to break will arrest the stock in the band between ₹800 and ₹900. Supports to watch are in the ₹840-850 range and at ₹820. Investors with a medium-term perspective can buy the stock with a stop-loss at ₹800. The medium-term trend continues to remain sideways.

Tata Steel (₹361.8)

Last week, Tata Steel gained over 5 per cent, reversing higher from the significant support in the band between ₹335 and ₹340. The short-term trend is still down. The stock needs to decisively rally above ₹400 to alter this downtrend and take it northwards to ₹420. The stock is facing key resistance ahead at ₹370 and then at ₹380. A clear move above both the resistances will push the stock higher to ₹400. But, inability to rally above ₹380 will confine the stock to trading sideways between ₹340 and ₹380 in the short term. Key supports below ₹340 are at ₹330 and ₹320.

Published on March 23, 2014
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