Market Strategy

Pivotals: Reliance Industries

Yoganand D | Updated on May 07, 2011 Published on May 07, 2011

Reliance Industries (Rs 955.4)

RIL slipped 2.7 per cent last week, which was in line with our anticipation. The short-term trend is down for the stock since April high of Rs 1065. As long as the stock trades below Rs 1010, the short-term downtrend remains in place. The stock is hovering well below its 50 and 200-day moving average.

Traders with short-term perspective can consider initiating short positions if the stock fails to move above Rs 970 while maintaining stop-loss at Rs 975 levels. Targets are Rs 940 and Rs 920. Subsequent key supports are positioned at Rs 900 and Rs 880. The stock has an important short-term resistance in the band between Rs 1000 and Rs 1010. A strong move above this band can take the stock higher to Rs 1040 or Rs 1065.

State Bank of India (Rs 2,642.9)

The stock decisively breached its significant short-term support between Rs 2,700 and Rs 2,720 range by plummeting 4 per cent accompanied by good volumes on last Tuesday.

Near-term trend is currently down for the stock and it is hovering well below its 200-day moving average. Failure to move beyond the above-mentioned range will indicate weakness in the stock and it can decline to Rs 2600, Rs 2550 and Rs 2500.

Short-term traders should tread carefully in the days ahead and initiate fresh short position only if the stock fails to move beyond Rs 2720. However, a strong jump above Rs 2720 can take the stock higher to Rs 2800 and then to Rs 2850 which are subsequent resistances. Medium-term trend is down for the stock since its November 2010 peak. Emphatic dive below Rs 2500 can pull the stock down to Rs 2400 or Rs 2350 in the mediumterm.

Tata Steel (Rs 594)

Conclusively breaching the 200-day moving average, Tata Steel retreated 3.4 per cent in the previous week. The stock reached our targets mentioned in the last column. It is currently hovering just above significant support band between Rs 580 and Rs 583.

Therefore traders should tread with caution as long as the support holds. Strong fall below this support will accelerate the decline further down to Rs 565 in the ensuing weeks.

Immediate resistance is pegged at Rs 610 and next is at Rs 630-640 range. Only a strong move above Rs 640 will lift the stock higher to Rs 660. The stock has been on a medium-term downtrend since its January peak of Rs 713. Medium-term significant support is positioned at Rs 552.

Infosys (Rs 2886.9)

Last week, the stock was jerky and it continues to test its strong support around Rs 2,900. Following a blip to intraweek low of Rs 2833, the stock re-bounded on Friday. The stock has been moving sideways over past three weeks.

The stock can consolidating sideways in the range between Rs 2830 and Rs 2950 in the upcoming week. Traders should remain cautious as long as the stock trades in this range. Medium-term trend is down for the stock since its January peak of Rs 3494 levels. It is trading way below its 50-day and 200-day moving averages. Key medium-term support is at Rs 2768 and resistances are at Rs 3050 and Rs 3150.

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