Technical Analysis

Pivotals: Reliance (Rs 827.4)

LOKESHWARRI S.K. | Updated on September 24, 2011 Published on September 17, 2011

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RIL reversed higher from Rs 795 as indicated last week and went on to the key short-term resistance at Rs 850. This is an important barrier to determine the trajectory that the stock can take in the upcoming weeks. Failure to move above this level will result in decline to Rs 793 or Rs 759 in the upcoming weeks whereas close above Rs 850 will take the stock to Rs 885 or Rs 920. Fresh longs are therefore advised only on a strong close above Rs 850.

The stock is reversing higher from the critical long-term support around Rs 720. The rally from this low has, however, not progressed sufficiently to help us determine if this bottom is sustainable. Investors with a greater penchant for risk can accumulate the stock in decline with stop at Rs 700.

State Bank of India (Rs 1,945.5)

SBI recorded the intra-week low of Rs 1,808 before reversing to close the week on a flat note. The hammer formation in the weekly chart is a positive, coming as it does at the significant long-term support of Rs 1,900. But the stock has to progress further before the short-term view turns positive. A close above Rs 2,080 is needed to signal that the short-term trend is turning positive. Weekly close above Rs 2,500 is needed to make the medium-term view positive.

In the week ahead, SBI will face resistance at Rs 2,048 and Rs 2,088. Reversal below these levels can keep the stock in the range between Rs 1,800 and Rs 2,100. Targets on a decline below Rs 1,800 are Rs 1,726 and Rs 1,708.

Tata Steel (Rs 459.7)

Tata Steel tested the support at Rs 450 indicated in our last column and bounced higher. The area around Rs 450 remains a short-term trend decider and traders can hold their long positions only as long as the stock trades above this level. Decline below will pull the stock to Rs 444 or Rs 424. Short-term resistances will be at Rs 484 and Rs 503.

Tata Steel is attempting to reverse higher from the long-term support around Rs 440 that occurs at 50 per cent retracement of the up-move from March 2009 low. Next significant support occurs at Rs 369 and long-term investors can accumulate the stock in declines with stop at Rs 360.

Infosys (Rs 2,393.4)

Infosys reversed higher from Monday's low of Rs 2,180 to rally to Rs 2,458 by Friday. The march however halted with a dark cloud cover pattern formation on Friday. The stock will face immediate resistance at Rs 2,490 and Rs 2,540. However a weak start will drag the stock lower to Rs 2,290 or Rs 2,180 in the ensuing sessions.

The medium-term trend in the stock is down though it can form a sustainable low in the zone between Rs 2,000 and Rs 2,200. The short-term turbulence will, however, persist as long as the stock trades below Rs 2,600.

Published on September 17, 2011

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