Technical Analysis

Tata Steel (₹513.5)

Yoganand D | Updated on August 31, 2014 Published on August 31, 2014






SBI (₹2,460.4)

The SBI stock fell 2.5 per cent last week without attempting to test its key resistance band between ₹2,580 and ₹2,600. This will keep the stock’s short-term downtrend intact, which has been in place from the May peak of ₹2,833 levels. The indicators on the daily and weekly charts are hovering in the neutral region with a negative bias. Traders with a short-term horizon can sell the stock on rallies with a stop-loss at ₹2,550. Targets are ₹2,400 and ₹2,350. A decisive fall below the key support at ₹2,350 can drag the stock down to ₹2,300 or ₹2,250 in the medium term. But, a decisive breakthrough of the ₹2,580 and ₹2,600 resistance band will alter the bearish outlook and take the stock higher to ₹2,750 and then to ₹2,850. Investors with a medium-term horizon can wait for a clear trend to emerge.

ITC (₹355.1)

Last week, the ITC stock recovered smartly, gaining 3.3 per cent. It rebounded after taking support around ₹343 levels. The stock is now trading well above its 21- and 50-day moving averages. With this, the stock resumes its short-term uptrend, which has been in place from the June low of ₹312. The RSI on the daily chart is on the verge of entering the bullish zone from the neutral region, implying bullish momentum. Both investors with a short- and medium-term perspective can continue holding it with a revised stop-loss at ₹340 levels. After its upward reversal last week, the stock reached its initial target of ₹356 and is trending higher towards ₹365. An emphatic breakout of ₹365 will pave way for an upward move to ₹375 and ₹386 in the medium term. Supports are at ₹345, ₹335 and ₹330.

Infosys (₹3,594)

Infosys closed on a slightly negative note after a volatile trade over the last two weeks. The stock is finding it difficult to breach the resistance level of ₹3,650 and formed a bearish engulfing candlestick pattern on Thursday. The indicators on the daily chart display negative divergence, implying that a trend reversal is on the cards. Therefore, traders can consider taking profits off the table at this juncture and re-entering later on. However, to confirm the downward reversal, the stock needs to decisively fall below ₹3,450 levels. Such a fall can drag it down to ₹3,350 and ₹3,200 . Immediate support is at ₹3,500. Conversely, if the stock surpasses ₹3,650, it can trend to ₹3,700. Subsequent resistance is at ₹3,800. Investors with a medium term perspective may hold the stock with a stop-loss at ₹3,200 levels.

RIL (₹999.2)

After a choppy trade for the second consecutive week, the stock of RIL closed flat last week. The wavering movement in the stock could continue in the near future. Nevertheless, it has been on a short-term downtrend from the May peak of ₹1,142 levels, which signals a clear downward trend. As long as the stock trades below the key resistance zone between ₹1,050 and ₹1,060, its downtrend will remain intact. The stock needs to conclusively breach its immediate support in the ₹960-₹970 band to extend its fall. In such a scenario, it can trend lower to ₹920 and then to ₹900 in the coming weeks. Traders should remain watchful and initiate fresh short position only on a fall below ₹960 levels. Significant hurdles above ₹1,060 are at ₹1,100 and ₹1,142 levels.

Tata Steel (₹513.5)

The stock plunged 4.5 per cent last week after conclusively breaching a key support at ₹520, which is also its 50-day moving average. This fall has reinforced the stock’s short-term downtrend that has been in place from a late July peak of ₹573 levels. The indicators on the daily chart feature in the bearish zone, backing the downtrend. Traders with a short-term perspective can continue to hold their short positions with a stop-loss at ₹525. It can decline to the immediate support level of ₹500 in the coming week. A conclusive breakthrough of this support will alter the medium-term sideways trend to bearish and pull the stock to ₹476 and ₹450 in the subsequent weeks. Key resistances to note are pegged at ₹530 and ₹550 and in the band between ₹570 and ₹580.

Published on August 31, 2014
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