Technical Analysis

Pivotals: Reliance Industries (697.3)

Yoganand D. | Updated on May 12, 2012 Published on May 12, 2012



In line with our expectation, the stock declined last week. It registered a 52-week low at Rs 671 on May 8. The stock has slumped 4 per cent and is presently testing the key medium-term support zone between Rs 690 and Rs 700. A conclusive breakthrough of this support will be the cue for initiating fresh short positions in the stock. In that case, the stock can decline and test its next support at Rs 671.

Next key medium-term support is at Rs 650.

Medium-term trend has been down for the stock from its early February peak of Rs 864.

This trend remains in place as long as the stock trades below Rs 790. Short-term trend is also down and the stock is hovering well below its 21 and 50-day moving averages. Important resistances for the week ahead are positioned at Rs 720, Rs 733 and Rs 755.

Infosys (Rs 2,311.8)

The stock dived 5.3 per cent in the previous week, strongly breaking through its long-term support at around Rs 2,360. With this decline, the stock appears to have resumed its medium-term downtrend that has been in place since this February high of Rs 2,990.

Traders with short-term perspective can consider selling the stock with stop-loss at Rs 2,360. Downside targets are Rs 2,270 and Rs 2,200, which is a key support level.

Key resistances for the stock above Rs 2,360 are at Rs 2,405, Rs 2,485 and Rs 2,540, the floor level of recent gap. Important medium-term resistance is pegged at Rs 2,600.

State Bank of India (Rs 1,852.2)

SBI continued its decline by tumbling 7 per cent last week. This decline has decisively breached the 200-day moving average and a key support at Rs 2,000. However, the stock is now testing the next key support around Rs 1,850.

The daily indicators and oscillators are hovering in the oversold levels. Further the stock is testing its daily Bollinger band's lower boundary indicating oversold. An upward reversal from the current support can lead to a corrective rally to Rs 1,936 or Rs 2,000 in the near-term.

As long as the stock trades below its significant resistance level at Rs 2,130 its medium-term trend remains down. A strong nose-dive below Rs 1,850 will reinforce the stock's downtrend and pull it down to Rs 1,776 and then to Rs 1,715 levels in the medium-tem.

Tata Steel (Rs 411.7)

The stock plunged 5 per cent in the previous week. It has emphatically breached its moving average compression (21, 50 and 200-day moving averages) around Rs 450. Short-term trend is down for the stock.

Traders with short-tem horizon can consider holding their short positions with stop-loss at Rs 425. Downside targets are Rs 400 and then Rs 393.

The stock's daily relative strength index and daily moving average convergence divergence indicators are hovering in the bearish zone implying downward momentum.

Important resistance is positioned at Rs 440.

Nevertheless, a strong rally above this level will push the stock 460 and then to Rs 470. Resistances above Rs 470 are pegged at Rs 490 and Rs 500.

Published on May 12, 2012
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