Technical Analysis

SBI: (₹2,415.2)

Yoganand D | Updated on August 10, 2014 Published on August 10, 2014






SBI’s stock continued its downtrend last week and fell 1 per cent. The stock is now testing its key support at ₹2,400 which is also the base line for a descending triangle pattern. The stock has been on a downtrend since its May 2014 peak at ₹2,833. It is hovering well below its 21- and 50-day moving averages. We reiterate our prior view that traders with a short-term perspective should initiate a fresh short position on a strong decline below ₹2,400, with a stop-loss at ₹2,420 levels. Targets are ₹2,300 and ₹2,250. Significant medium-term support for SBI is pegged at ₹2,150 levels. On the other hand, the stock has key resistances placed at ₹2,500 in the band between ₹2,580 and ₹2,600. Above ₹2,600, it can face resistance at ₹2,750 and ₹2,850. Investors with a medium-term perspective can exit and buy later.

ITC (₹348.4)

ITC hovered around current levels in the previous week. The stock formed a bullish engulfing candlestick pattern at a key support level on Friday, signalling a pause in its correction. It is trading well above its 50- and 200-day moving averages. Investors with both a short- as well as medium-term horizon can consider buying the stock at declines with a stop-loss at ₹335. The stock is testing support at ₹345; a further fall is also likely to find support at ₹340 levels. An upward reversal from either support level can push it up to ₹365 in the near term. The stock needs to breach the key hurdle at ₹365 to strengthen its uptrend and take it to ₹375 and then to ₹385. However, an emphatic fall below the key support of ₹330 will mar the uptrend and pull it down to ₹315 in the short term.

Infosys (₹3,480.3)

Infosys jumped 4 per cent last week, emphatically breaching its key resistance and 200-day moving average at ₹3,350. This up move has reinforced the stock’s bullish momentum. The stock has extended its short-term uptrend that has been in place since a May 2014 low of ₹2,894. Traders with a short-term perspective can make use of dips to buy the stock while maintaining a stop-loss at ₹3,430. The stock can trend northwards and reach the price target of ₹3,600 and then ₹3,650 levels in the short term. Investors with a medium-term perspective can accumulate the stock with a revised stop-loss at the level of ₹3,150. Key supports are pegged at ₹3,350 and then in the zone between ₹3,200 and ₹3,250. A strong rally beyond ₹3,650 can take the stock higher to ₹3,800 in the medium term.

Tata Steel (₹537.5)

Tata Steel plunged 2 per cent last week, reversing from its significant resistance band between ₹570 and ₹580. This stock has breached its key immediate support level of ₹545, which is also its 21-day moving average. The relative strength index on the daily chart is trending down within the neutral. The weekly RSI is displaying a negative divergence, signalling a possibility of the stock’s trend reversal emerging now. Traders with a short-term perspective can initiate fresh short position with a stop-loss at ₹552. Targets are ₹520 and ₹510. The next important support is seen at ₹500. Investors with a medium-term horizon can take profits off the table at this juncture. On the upside, a decisive rally above ₹580 will take the stock higher to ₹600 and then to ₹630.

RIL (₹980.4)

RIL was volatile and ended the week on a flat note with a negative bias. Since May 2014 peak of ₹1,142, the stock has been on a short-term downtrend. While trending down, the stock conclusively breached its psychological support level of ₹1,000 and is now hovering well below it. The indicators on the daily chart continue to feature in the negative zone, backing the downtrend. We reaffirm that traders with a short-term perspective can sell the stock on rallies with a stop-loss at ₹1,000. It can fall to ₹950 and then to ₹930, where its 200-day moving average is poised. Next key supports are pegged at ₹920 and ₹900. On the upside a decisive rally above the key resistance band between ₹1,050 and ₹1,060 is needed to alter its downtrend and take the stock higher to ₹1,100 or ₹1,142.

Published on August 10, 2014
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