Technical Analysis

Pivotals - Reliance Industries (726.4)

Yoganand D. | Updated on May 05, 2012 Published on May 05, 2012




The stock fell 1.8 per cent in the previous week and is testing key support at Rs 723. Short-term trend is down for the stock. This trend will persist as long as the stock hovers below Rs 800, an important trend deciding level. The stock is trading well below its 50 and 200-day moving averages. On Friday, it closed below the 21-day moving average and is showing signs of bearishness. The daily relative strength index has entered the bearish zone and the weekly RSI is on the brink of entering this zone. The daily volumes are deteriorating.

Short-term traders can initiate fresh short positions if the stock drops below Rs 723 while maintaining stop-loss at this level. Downside targets are Rs 700 and Rs 690.

A decisive breach of Rs 690 will pave way for a decline to Rs 675 which is a key medium-term support. Significant short-term resistances are at Rs 755 and Rs 770. Subsequent resistances are at Rs 783 and Rs 800.

Infosys (Rs 2,441.1)

Infosys advanced 1.8 per cent last week. Traders with high risk profile can consider holding their long position as long as the stock trades above Rs 2,400 with stop-loss at same level. An up move to Rs 2,485 and to Rs 2,540 (floor of the stock's recent gap) is possible. Resistance above Rs 2,540 are at Rs 2,580 and Rs 2,670. Conversely, a fall below Rs 2,400 will strengthen the bearishness and fall to Rs 2,360 and to Rs 2,310 in the ensuing week.

Medium-term trend is down for the stock from its February peak of Rs 2,990. A strong breakthrough of the stock's long-term support at Rs 2,360 will add momentum to the downtrend and pull the stock down to Rs 2,270 and to Rs 2,200.

State Bank of India (Rs 1,993.6)

In line with our expectation, the stock declined in the past week. It tumbled 6.5 per cent, breaking through the key support at Rs 2,130. The stock is currently testing the medium-term key support level at Rs 2,000. An emphatic close below this level will mar the medium-term uptrend and pull the stock down to Rs 1,890 and Rs 1,775 levels in the medium-term. Traders with short-term perspective can consider holding their short positions by maintaining the stop-loss at Rs 2,060.

On the other hand, a rally above Rs 2,060 will take the stock higher to Rs 2,130 in the near-term. Next important resistances are at Rs 2,200 and Rs 2,300.

Tata Steel (Rs 433.5)

Tata Steel plunged 6.4 per cent with good volume in the last week after testing the key resistance for over two months. It has emphatically breached the short-term support mentioned last week in this column. The daily relative strength index has entered the bearish zone from the neutral region. Further, daily moving average convergence divergence indicator has signalled a sell and is about to enter the negative territory implying downward momentum. Short-term outlook is bearish for the stock.

Traders can consider initiating short positions with stop-loss at Rs 444. Targets are Rs 420 and Rs 400. Key resistances to watch are pegged at Rs 454 and then Rs 470. Resistances above Rs 470 are at Rs 490 and Rs 500.

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Published on May 05, 2012
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