Technical Analysis

SBI (₹2,523.6)

Yoganand D | Updated on August 24, 2014 Published on August 24, 2014

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Last week, the stock reversed from ₹2,355 levels and gained 6.8 per cent. Nevertheless, the stock’s short-term trend will remain bearish as long as it trades below the key resistance band between ₹2,580 and ₹2,600. Only a decisive breach of this band will alter the downtrend and take it to ₹2,750 and then to ₹2,850. The indicators on the daily chart are showing divergent signs. Traders with a short-term perspective should tread with caution as long as the stock trades below the resistance band. A failure to break through ₹2,600 can result in the stock moving sideways in a wide band between ₹2,400 and ₹2,600. A fall below ₹2,400 will reinforce bearish momentum and drag the stock down to ₹2,355, ₹2,300 and ₹2,250. Investors with a medium-term perspective should also tread with caution in the coming week.



ITC (₹343.7)



The stock fell 3.6 per cent last week, closing well below its 21-day moving average. It trades just above its immediate key support at ₹340, which is also the 50-day moving average.The indicators on the daily chart have entered the neutral region from the bullish zone. The indicators on the weekly chart also feature in the neutral region. However, the short-term uptrend that has been in place from the June trough of ₹312 will remain in place as long as the stock trades above ₹330. An upward reversal from the key immediate support level of ₹340 can take the stock higher to ₹356 and then to ₹365. Both investors with a short- and medium-term perspective can consider buying the stock with a stop-loss at ₹335. Conversely, a conclusive fall below ₹330 will mar the uptrend and pull it down to ₹315 levels.



Infosys (₹3,601.2)



The stock of Infosys managed to gain 1.7 per cent on Friday, but closed flat for the week. It has been on a short-term uptrend from its May 2014 low of ₹2,894. Both the daily and weekly indicators feature in the bullish zone, backing the stock’s uptrend. We reiterate that traders with a short-term horizon can continue to hold their long positions and also initiate fresh positions with a stop-loss at ₹3,450. The stock can extend its rally and target ₹3,650 and ₹3,700 subsequently. Next key medium-term resistance is pegged at ₹3,800 levels. Investors with a medium-term perspective can stay invested with a stop-loss at ₹3,200 levels. On the downside, the stock has key immediate support at ₹3,500. A fall below the subsequent support level at ₹3,450 can pull it down to ₹3,350 and ₹3,200 levels in the medium term.



RIL (₹998)



The movement in RIL was volatile last week. The stock formed a spinning top candlestick pattern on the weekly chart implying indecisiveness. RIL continues to be in a short-term downtrend from its May high of ₹1,142 levels. This downtrend will persist as long as the stock trades below the key resistance zone between ₹1,050 and ₹1,060. But, the stock has a significant support in the ₹960-₹970 band, cushioning the stock’s fall. Both the daily and weekly relative strength indices hover in the neutral region. Hence, traders with a short-term perspective should tread with caution as long as the stock trades between ₹960 and ₹1,060. A downward breach of ₹960 level will drag the stock down to ₹930 and then to its next supports at ₹920 and ₹900. Key resistances above ₹1,060 are pegged at ₹1,100 and ₹1,142.

Tata Steel (₹537.6)

Tata Steel closed the week on a slightly negative note. The medium-term trend has been sideways in the broad band between ₹500 and ₹580 since early June 2014. An emphatic decline below the support at ₹520 can pull the stock down to ₹500. In such a scenario, traders with a short-term perspective can consider initiating short position with a stop-loss at ₹525. The indicators on the daily chart are on the brink of entering the bearish zone. The relative strength index on the weekly chart displays a negative divergence. This indicates the possibility of the stock’s trend reversal, but this can be confirmed only after it falls decisively below ₹500. Important supports below ₹500 are at ₹476 and ₹450. But an upward break through of ₹580 can push the stock higher to ₹600 and then to ₹630.

Published on August 24, 2014
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