Technical Analysis

Sizzling Stocks: Bajaj Finserv (Rs 544.7)

Yoganand D. | Updated on March 05, 2011 Published on March 05, 2011

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The stock zoomed 20 per cent to hit its upper circuit limit of Rs 527 on March 3. It surged another 15 per cent to mark its intra-week high of Rs 607 the very next day. However, on selling pressure the stock gave up some of its gains and declined, testing its long-term resistance band between Rs 555 and Rs 565, to finish the week with 28 per cent gains. We notice the formation of a shooting star candlestick pattern with long upper shadow, a bearish reversal pattern. Its daily relative strength index has entered into the over bought territory. With this, we believe that the stock can decline and test its immediate supports at Rs 520 and Rs 510.

Long-term trend has been up for the stock since its all-time low of Rs 88, marked in December 2008. Emphatic close above Rs 565 will lift the stock higher to Rs 610 and then to Rs 700 over the long-term. Nonetheless, reversal from this key resistance zone can pull the stock down to Rs 490 and to Rs 440 in the medium-term.

Mahindra and Mahindra (Rs 676.2)

Taking support at its important long-term base around Rs 600, M&M bounced up surging almost 14 per cent. The surge was accompanied by good weekly volumes too. However, it encountered significant resistance (short-term resistance, 200-day moving average and 38.2 per cent fibonacci retracement level of its prior downtrend) around Rs 680 and is currently testing it. Medium-term trend is down for the stock from its November 2010 peak of Rs 826. As long as the stock hovers below Rs 730, the downtrend remains in place.

Failure to breach its significant resistance at Rs 680 will pull the stock down to Rs 640 and then to its long-term support at Rs 600. On the other hand, strong break through of this resistance will take the stock higher to Rs 710 and to Rs 730. —

Published on March 05, 2011

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