Technical Analysis

High Five

Yoganand D | Updated on July 20, 2014 Published on July 20, 2014






SBI (₹2,561.4)

Last week, the stock smartly recouped some of its previous week’s loss by gaining 5.8 per cent. However, the stock is testing a key resistance between ₹2,580 and ₹2,600. Therefore, only a decisive breach of this resistance band will pave way for an up move to ₹2,700 and ₹2,750. In such a scenario, traders can go long with stop-loss placed at ₹2,580 levels. Next key resistance above ₹2,750 is at ₹2,850. On the other hand, the inability to breach the key resistance band can take the stock lower to ₹2,450 or ₹2,400. A strong decline below ₹2,400 will turn the short-term trend bearish and pull the stock down to ₹2,300 and then to ₹2,250. Investors with a medium-term perspective can consider holding their long positions with a stop-loss at ₹2,250. A conclusive breakthrough of ₹2,850 will strengthen the bullish momentum and take the stock higher to ₹3,000 and ₹3,100 in the medium term.

ITC (₹344.1)

After its recent rally from ₹315 last month, the stock is now pausing and trading in a sideways range. However the short-term trend for the stock is up. It is hovering well above its 200-day moving average. The indicators on the daily chart figure in the bullish zone, backing the uptrend. The daily as well as weekly moving average convergence divergence indicators feature in the positive territory, implying upward momentum. We reiterate that investors with short- as well as medium-term perspective can consider buying the stock on declines while maintaining a stop-loss at ₹330. The stock can resume its up move and target ₹355 and ₹365 in the short term. A conclusive break above ₹365 will pave way for an up move to ₹375 and then to ₹385 over the medium-term. Nevertheless, a decisive slump below ₹330 will alter the stock’s bullish trend and pull it down to ₹315.

Infosys (₹3,253.2)

Amid a volatile trade, Infosys fell 2 per cent in the previous week. The stock lacks bullish momentum that can take it past its key resistance at ₹3,350 — its 200-day moving average. On the other hand, the stock has been finding support at its base level of ₹3,200 over the last one month. For a clear short-term trend to emerge, the stock needs to either decisively fall below ₹3,200 or rally above ₹3,350 levels. Hence, traders should tread with caution and desist trading as long as the stock moves within this sideways band. A strong fall below ₹3,200 can drag the stock down to ₹3150 and then to ₹3,050. Subsequent support below these levels is placed at ₹2,900. But an emphatic jump above ₹3,350 will reinforce bullish momentum and take it higher to ₹3,450 and ₹3,550 levels. Investors with a medium-term perspective can make use of declines to buy the stock with a revised stop-loss at ₹3,050.

RIL (₹976.7)

Short-term trend in RIL has been down from its early May 2014 high of ₹1,142.5. The stock formed a spinning top candlestick pattern in the weekly chart implying indecisiveness. The stock’s indicators and oscillators in the daily chart continue to feature in the bearish zone, supporting the downtrend. Traders with a short-term perspective can consider selling the stock with a new stop-loss at ₹1,014. The stock can decline to ₹950 and then to ₹920 in the upcoming weeks. Additionally, investors with a medium-term perspective can take profits off the table at this juncture and wait on the sidelines. Significant support below ₹920 is at ₹900. Conversely, the stock has significant resistance at ₹1,000 and next in the band between ₹1,050 and ₹1,060. An emphatic move above ₹1,060 is required to alter the short-term downtrend and take the stock higher to ₹1,140 levels.

Tata Steel (₹562)

The Tata Steel stock was in focus last week as it gained 12 per cent, after taking support at ₹500 levels. The stock’s indicators and oscillators in the daily chart have entered the bullish zone from the neutral region. There has been an increase in volumes in the past week. However, the stock faces a key resistance in the zone between ₹570 and ₹580. Only an emphatic breakthrough of this resistance will further strengthen the stock’s uptrend and take it northwards to ₹600 and then to ₹630 in the medium term. Traders with short-term perspective should initiate fresh long position only on a clear break-out of ₹580 with a stop-loss at this level. Failure to breach this level will keep the stock in a sideway range. Important supports to note are pegged at ₹550 and ₹520. A strong fall below ₹520 will drag the stock lower to ₹500 in the short term.

Published on July 20, 2014
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