Technical Analysis

Pivotals: Reliance Industries (Rs 851.7)

Yoganand D. | Updated on November 17, 2013 Published on November 16, 2013

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The stock extended its decline by slipping 3.7 per cent in the previous week. It is now testing a significant long-term support band between Rs 840 and Rs 850. Long-term moving average is also poised in this band. Volumes on the daily chart have been declining over the past two weeks. The indicators on the daily chart are featuring in the bearish zone indicating a negative bias.

A strong fall below Rs 840 will reinforce the stock’s ongoing short-term downtrend and it can test the next support at Rs 820. In that scenario, investors with medium-term perspective can consider exiting the stock and re-enter later. Subsequent important supports at Rs 800 and Rs 780 will come into play.

On the other hand, the stock needs to decisively rally beyond its significant resistance at Rs 890 levels to alter its downtrend. Then, an upside rally to Rs 910 or Rs 920 is possible.

State Bank of India (Rs 1,722.4)

SBI prolonged its very volatile movement last week too. Traders with a short-term perspective should tread with caution in the ensuing week as near-term trend is still uncertain. After testing its important support band between Rs 1,680 and Rs 1,700, the stock bounced back and is hovering just above it.

A decisive fall below this range will mar its short-term uptrend and drag the stock down to Rs 1600 levels.

Key supports below this level are at Rs 1500 and Rs 1510 range and then at Rs 1400. The stock’s significant resistance at Rs 1800 and Rs 1900 will provide a threat to upside if it rebounds from the aforementioned support band. A strong up move above Rs 2000 is needed to reverse its medium-term downtrend. Next resistance is at Rs 2200.

Infosys (Rs 3,353.8)

Infosys continued its choppy progress last week and formed a spinning top candlestick pattern on the weekly chart depicting indecisiveness. Traders should be cautious of this stock as long as it remains in the sideways consolidation range between Rs 3250 and Rs 3,400.

Only a conclusive upward breakout can take the stock higher to Rs 3500 levels.

Nevertheless, indicators of the stock are displaying a negative divergence implying a short-term trend reversal is on the cards. In that case, a fall below Rs 3200 can pull the stock down to Rs 3100 or to Rs 3000 in the coming weeks.

Having said that, investors with a medium-term perspective can remain invested with a stop-loss at Rs 2800.

Tata Steel (Rs 375.3)

Last week, the stock rose 5.5 per cent accompanied by good volumes. The short as well as medium-term trends are up for the stock. Traders can continue holding their long positions with a stop-loss at Rs 360. The upside targets are Rs 380 and Rs 390 levels. But, a decisive fall below this level can pull the stock down to Rs 350 or to Rs 340 levels in the near-term.

Next important base is positioned at Rs 320 and then at Rs 310. Short-term uptrend will be under threat if the stock slips below Rs 310.

The stock has a significant long-term resistance in the band between Rs 390 and Rs 400 in the weeks ahead. Only an emphatic breakthrough will pave the way for a rally to Rs 420 and then to Rs 440 in the upcoming months.

Published on November 16, 2013
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