Pivotals near medium-term hurdles

Reliance Industries (Rs 840.3)

Following an intermediate-term downtrend from November 2010 peak of Rs 1,187, RIL took support at its key long-term base around Rs 700 in December 2011. The stock took support from this level again in May 2012 and changed its direction triggered by positive divergence in weekly moving average convergence divergence indicator. Since then the stock has been in a medium-term uptrend.

However, the stock has key resistance ahead at Rs 850 and Rs 900. Break above this level will take the stock to the next intermediate resistance at Rs 1,000. Since this is also a psychological resistance, investors with short- to medium-term horizon can cash some profits on inability to move above this level.

Strong break above Rs 1,000 is required to take the stock to its long-term resistance around Rs 1,200. Inability to move above Rs 1,000 will mean that the stock could consolidate sideways in a broad range of Rs 700 and Rs 1,000. A strong downward break through of Rs 700 can pull the stock down to Rs 600 or Rs 550 in the long-term.

State Bank of India (Rs 2,377.7)

After bottoming at the December 2011 trough at Rs 1600, State Bank of India has been in an intermediate-term uptrend. The stock's key support at Rs 1,800 provided cushion in May and August. Medium-term trend has been up since this August. The stock is facing important long-term resistance at Rs 2,500.

A conclusive weekly close above this resistance will take the stock higher to Rs 2,750.

This is the key resistance that investors need to be wary of in the year ahead.

Inability to move above this level will drag the stock lower to Rs 2,300 or Rs 2,000. Conversely, strong move beyond Rs 2,750 will pave the way for the stock moving on towards its former high at Rs 3,515.

Important supports for the year ahead are at Rs 2,200, 2,000 and Rs 1,850.

An emphatic fall below Rs 1,850 will mitigate the stock's progressing uptrend and drag it lower to Rs 1,700 and to Rs 1,600.

Infosys (Rs 2318.4)

Infosys has been in an intermediate-term downtrend ever since peaking out from its January 2011 peak of Rs 3493, forming lower peaks and troughs. In September 2012, the stock reversed downwards from a key resistance around Rs 2600, resuming its downtrend by breaching its 200-week moving average. But, the stock is testing significant long-term support in the range between Rs 2250 and Rs 2300. The stock's 50 per cent Fibonacci retracement level of its prior uptrend coincides with the aforesaid support range making it as a vital support. A decisive decline below this support range will strengthen the stock's ongoing downtrend and pull it down to Rs 2100 and below that to Rs 2,000. Since the stock has long-term support around this level, investors should view fall below Rs 2,100 as an opportunity to buy the stock for the long-term.

Conversely, the stock needs to emphatically climb above Rs 2,600 initially and then its subsequent key resistance at Rs 3,000 to indicate that bullish momentum is back. Such a breakout can take the stock higher to Rs 3,300 and to Rs 3,500.

Tata Steel (Rs 428.3)

Tata Steel has long-term support in the zone between Rs 330 and Rs 370. Though the stock reversed higher from this zone in January, it reversed to test these levels again in August and November this year. The long-term outlook will deteriorate considerably if the stock goes on to close below Rs 330. Investors should consider exiting this stock on breach of this level.

The stock faces strong resistance around Rs 500. Breach of this level will take the stock to Rs 568. The medium-term outlook will turn positive only on close above Rs 568. Inability to do so will keep the stock in the range between Rs 330 and Rs 570 for few more months. Target on break above Rs 570 is Rs 700. It is hard to envisage a break above Rs 700 in the coming year.

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