Technical Analysis

Pivotals: Reliance Ind, SBI, Tata Steel and Infosys

| Updated on: Jun 25, 2011








Reliance Industries (Rs 870.4)

The stock tumbled 4.5 per cent last Monday and recorded its 52-week low of Rs 829. However, it subsequently rebounded recouping its loss and finished the week at around the same level. Both medium-term and short-term trends are down for the stock. RIL has immediate key resistance at Rs 900.

Failure to surpass this resistance will pull the stock down to Rs 850 or to Rs 830 in the short-term. We see that there is an increase in volumes over the past eight sessions. Alternatively, as the stock is reversing higher from its 52-week low, traders with high risk appetite can make use of dips to buy the stock while maintaining stiff stop-loss at Rs 850 and exit around the resistance level of Rs 900. An emphatic breakthrough of Rs 900 can lift the stock higher to Rs 930 or Rs 950 in the upcoming weeks. Key medium-term supports are at Rs 800 and Rs 740.

State Bank of India (Rs 2,288.1)

SBI took support around Rs 2,150 levels in the middle of last week and bounced up sharply gaining 6 per cent with good volumes on Friday. It ended the week on a positive note by advancing 3.5 per cent. The stock appears to have bottomed out from a short-term perspective. Its daily relative strength index is displaying positive divergence backing the short-term trend reversal. Shortterm perspective traders can hold their long positions with 2,230 levels. Upside targets are Rs 2,350 and Rs 2,400. Failure to move above the first target will indicate weakness and traders can book profits. In that case, the stock can stay range bound between Rs 2,150 and Rs 2,350. Supports below Rs 2,150 are at Rs 2,050 and Rs 2,000. Medium-term trend remains down for the stock since last November. Strong move above Rs 2,950 will mitigate this downtrend.

Tata Steel (Rs 578.6)

The stock was volatile during the previous week ; it took support around Rs 555 once more and moved higher. Breaching its 21-day moving average, the stock climbed Rs 6 in the previous week. The stock is still testing its short-term downtrend line that has been in place since April. Conclusive move above Rs 585 will penetrate this trend line and indicate signs of bullishness.

Traders can initiate fresh long positions in that scenario with tight stop-loss. Targets are Rs 600 and Rs 615. Key resistance above Rs 615 are at Rs 630 and Rs 640. On the other hand, inability to move above Rs 585 can drag the stock down to Rs 565 or to Rs 555 in the ensuing days. Significant medium-term support below Rs 555 is at Rs 530.

Infosys (Rs 2,862.1)

The stock achieved our first target of Rs 2,700 and marked a 52-week low at Rs 2,660 on June 20. However, it bounced up strongly to finish the week with 3.5 per cent gains. Friday’s 3 per cent gain helped the stock breach its 21-day moving average. The stock is facing important resistance at Rs 2,900. Fresh long positions are recommended only on decisive jump above this resistance with stiff stop-loss. This will lift the stock higher to Rs 3,000 in the near-term. Nevertheless, failure to climb will confine the stock in the range between Rs 2,700 and Rs 2,900 in the short-term.

Next support is at Rs 2,630. Medium-term trend is still down for the stock. Only a move beyond Rs 3,200 will diminish this downtrend and take the stock higher to Rs 3,400 in the forthcoming months

Published on June 25, 2011

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