The stock breached the key support at Rs 690 and declined to an intra-week low of Rs 673 last week. However, taking support around this low, it recovered most of its losses. Still, the stock appears to be testing its important support range between Rs 690 and Rs 700. An upward reversal will be a corrective rally for the stock and can encounter resistance at Rs 720 in the short-term.

Failure to move past this resistance can keep the stock confined to moving sideways between Rs 671 and Rs 720 for a while, before moving in a clear direction. Next key resistances are positioned at Rs 733 and Rs 755.

As long as the stock trades under Rs 790, its medium-term trend will be down and we don't rule out the possibility of it declining to Rs 671 once more. Subsequent key support is pegged at Rs 650.

Infosys (Rs 2,385.4)

The stock was volatile and added three per cent in the previous week, contrary to our expectation. It is currently taking support around Rs 2,305 and bouncing up with low volumes. Short-term traders should tread with caution as long as the stock manages to trade above Rs 2,305 support level. A downward breach of this support will strengthen the bearish momentum and pull the stock down to Rs 2,270 and to 2,200.

Continuation of the stock's current up move will encounter resistances at Rs 2,405, Rs 2,485 and Rs 2,540. Strong rally above Rs 2,600 is required to reverse the medium-term downtrend that has been in place from this February peak of Rs 2,990.

State Bank of India (Rs 1,942)

After testing key support around Rs 1,850, the stock took base and bounced up sharply last week. This up move was triggered by the daily indicators and oscillators reaching oversold levels and displaying positive divergence. The stock gained almost five per cent accompanied by good volumes in the previous week. Short-term traders can initiate fresh long positions with stop-loss at Rs 1,942. Targets are Rs 2,000 and Rs 2,070.

An emphatic rally above Rs 2,130 is needed to alter the stock's medium-term downtrend and push it higher to Rs 2,220. Key supports to watch in the upcoming week are at Rs 1,900 and then in the Rs 1,820 and Rs 1,850 band. Conclusive penetration of Rs 1,820 will pave the way for a decline to Rs 1,776 and then to Rs 1,715 in the months ahead.

Tata Steel (Rs 399.8)

In line with our expectation, the stock declined and achieved our price targets of Rs 400 and Rs 393. The stock fell 2.8 per cent with good volumes. It is currently testing an important long-term support band between Rs 390 and Rs 400. On Friday, the stock declined to an intra-day low of Rs 390 and recovered smartly, forming a bullish reversal candlestick pattern, namely, dragonfly doji candlestick pattern.

As this pattern has occurred at the bottom of the downtrend and at a key support band, we believe that the stock's downtrend could have come to an end and the short positions are probably covered. The stock's daily relative strength index is showing signs of positive divergence. However, it is very early to jump to a conclusion. The stock has to rally above the significant resistance level at Rs 420 to confirm it.

A decisive break through of Rs 420 will lift the stock higher to Rs 440 and to Rs 450 in the short-term. A failure to move above Rs 420 will confine the stock to moving between Rs 390 and Rs 420. Key support below Rs 390 is at Rs 374.

Related Topics
comment COMMENT NOW