Technical Analysis

Pivotal - Reliance Industries (Rs 835.4)

Yoganand D. | Updated on October 22, 2011 Published on October 22, 2011





RIL moved contrary to our expectation and fell 3.6 per cent in the last week. However, its short-term trend is up and it stays intact as long as the stock trades above Rs 797 levels. The stock is finding difficulty in surpassing its immediate peak formed at Rs 870 last week. It can consolidate sideways between Rs 820 and Rs 870 for a while before moving in either direction. Short-term traders can initiate fresh long position with stop-loss at Rs 820 and exit at Rs 854 or at Rs 870 levels. However, a fall below Rs 820 will pull the stock down to Rs 797 in the ensuing weeks. Resistances beyond Rs 870 are at Rs 880 and Rs 900.

Medium-term down trend that began from its April peak of Rs 1,065 continues to be in place. Only a conclusive move above the zone between Rs 900 and Rs 910 will reverse the trend and lift the stock higher to Rs 950 or Rs 985 in the medium-term. Important medium-term supports are at Rs 788 and Rs 765.

State Bank of India (Rs 1,948.6)

SBI advanced 3.5 per cent last week in line with our expectation. It reached our first price target of Rs 1,950 and is proceeding to the next at Rs 2,006. Short-term traders can continue to hold their long positions with stop-loss at Rs 1,860. Only a strong move above Rs 2,006 will take the stock upwards to Rs 2,080 and to Rs 2,140. However, inability to exceed resistance level Rs 2006 resistance level will pull the stock down to Rs 1,900.

On the downside, tumble below Rs 1,830 can pull the stock down to Rs 1,795 or to Rs 1,750 in the short-term. The stock remains in the medium-term downtrend. Strong rally above Rs 2,500 is needed to reverse this downtrend and lift the stock to Rs 2,755. Medium-term key support is at Rs 1,600.

Tata Steel (Rs 432.1)

The stock was volatile and fell Rs 6 or 1.4 per cent last week. However, it is hovering slightly above our short-term stop-loss of Rs 422. Traders can consider holding their long position with same stop. Targets are Rs 450 and the resistance band between Rs 470 and Rs 475. On the contrary, dive below Rs 422 will reinforce the bearishness and pull the stock down to Rs 410 and Rs 400 in the near-term.

Medium-term trend is down for Tata Steel. Weekly close below Rs 400 will accelerate the stock's downward move in the medium-term to Rs 369. To alter the downtrend, a strong move above Rs 520 is required.

Infosys (Rs 2,722.7)

The stock moved sideways in the band between Rs 2,686 and Rs 2,763 and finished the week losing Rs 22. Its short-term trend is up since the August 25 low of Rs 2,169. As long as the stock hovers above Rs 2,450, its trend continues to be up. The stock is testing its medium-term trend deciding band between Rs 2,700 and Rs 2,750. A decisive break through of this band will be positive and the stock can trend northwards and reach Rs 2,825 and Rs 2,900 in the upcoming weeks.

However, failure to break through Rs 2,750 can drag the stock down to Rs 2,600. Next support for the stock is at Rs 2,500.

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Published on October 22, 2011
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