Technical Analysis

SBI (₹2,439.4)

YOGANAND D | Updated on August 03, 2014 Published on August 03, 2014

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Snapshot: 1 SBI hovers just above key support level 2 Small correction in ITC’s uptrend 3 A key hurdle keeps Infosys’ rally in check 4 RIL resumes its short-term downtrend 5 Tata Steel is poised below the key resistance

SBI fell by 2.5 per cent last week and is hovering just above its key support level at ₹2,400. The stock has been on a short-term downtrend, ever since it recorded its 52-week high of ₹2,833 in late May 2014. While trending down, the stock has decisively breached its 50-day moving average. Traders with a short-term horizon can initiate fresh short position only if the stock declines below ₹2,400 with a stop-loss at ₹2,420 levels.

The near-term targets are ₹2,300 and ₹2,250. The next significant medium-term support for SBI is pegged at ₹2,150 levels. Key resistances to watch are positioned at ₹2,500 and then between the ₹2,580 and ₹2,600 zone. Above ₹2,600, it can face resistance at ₹2,750 and ₹2,850. Investors with a medium-term horizon can exit the stock and re-enter later.

ITC (₹349.7)

The stock of ITC slipped 2 per cent last week after testing a significant hurdle at ₹365. This could be a minor correction in the stock’s short-term uptrend. The stock is hovering well above its 50- and 200-day moving averages. Investors with both a short- as well as medium-term perspective can consider buying the stock in declines with a stop-loss at ₹335.

The stock’s corrective fall can find support at ₹340. An upward reversal from this level can take the stock higher to ₹365 in the coming weeks. But for the rally to continue to ₹375 and then to ₹385, the stock needs to decisively breach the key hurdle at ₹365. On the downside, the stock has a key support at the level of ₹330. An emphatic fall below this level will mar the stock’s uptrend and pull it down to ₹315 in the short term.

Infosys (₹3,340.3)

The stock of Infosys continues to test its 200-day moving average and significant resistance at ₹3,350. The stock has been on a short-term uptrend from its May 2014 low at ₹2,894. It trades well above its 21- and 50-day moving averages. The indicators on the daily chart are featuring in the positive territory. An emphatic breakthrough of ₹3,350 will be the cue for short-term traders to initiate fresh long position with stop-loss at ₹3,325 levels.

The short-term targets are ₹3,450 and ₹3,550 levels. Investors with a medium-term perspective can accumulate the stock on declines with a stop-loss at the level of ₹3,050. Declines in the stock will find support in the zone between ₹3,200 and ₹3,250. The next supports below ₹3,250 are placed at the levels of ₹3,150, ₹3,050 and ₹2,900, respectively.

RIL (₹978.4)

RIL tumbled 4 per cent last week and breached its immediate psychological support level of ₹1,000. This fall has strengthened the stock’s short-term downtrend that has been in place from its May 2014 peak of ₹1,142. The indicators on the daily chart are featuring in the negative zone, backing the downtrend. Investors with a medium-term perspective can exit the stock and buy later.

Traders with a short-term perspective can sell the stock on rallies with a stop-loss at ₹1,000. The stock can extend its fall to ₹950 initially and then to ₹928 where its 200-day moving average is poised. Subsequent supports are at ₹920 and ₹900. On the upside, only a decisive rally above the key resistance band between ₹1,050 and ₹1,060 can alter the stock’s downtrend and take it higher to ₹1,100 or ₹1,142.

Tata Steel (₹549.2)

The stock slipped 1.4 per cent last week and is trading below its significant resistance band between ₹570 and ₹580. The relative strength index on the daily chart is hovering in the neutral region after displaying a negative divergence. The weekly relative strength index is also displaying a negative divergence, signalling the possibility of the stock’s trend reversal in the coming sessions.

Traders should trade with caution and initiate fresh short position on an emphatic fall below ₹550 with a stop-loss at ₹560. Targets are ₹540 and ₹520. The next important support is seen at ₹500. On the other hand, a conclusive rally above ₹580 will reinforce bullish momentum and take the stock higher to ₹600 and then to ₹630 in the medium term.





Published on August 03, 2014
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