Market Strategy

Sizzling Stocks: SKS Microfinance (Rs 493.2)

Yoganand D. | Updated on July 09, 2011 Published on July 09, 2011

After hovering around key medium-term support level of Rs 330, the microfinance player stock skyrocketed 20 per cent on Thursday due to the release of the draft Micro Financial Sector Bill 2011 by the Finance Ministry. The stock rose on Friday as well to hit its upper circuit for the second consecutive session and finished the week with 44 per cent gains.

Since its all-time low of Rs 262 recorded in early May, it has been on a medium-term uptrend. The stock is currently facing resistance at around Rs 545. Inability to move above this resistance can pull the stock down to Rs 410 or even to Rs 330 in the medium term. Key support below Rs 330 is at Rs 270. Conclusive break out of Rs 545 will lift the stock higher to Rs 650 and then to Rs 750. However, to negate the stock's intermediate-term downtrend, which has been in place from its September 2010 peak of Rs 1,490, it has to move above Rs 900.

D B Realty (Rs 85.6)

The stock zoomed 22 per cent with good volumes last week, taking support in the band between Rs 60 and Rs 70. This surge has penetrated its 21- as well as 50-day moving averages and its immediate resistance level at Rs 82. However, its medium-term down trend that commenced from April peak of Rs 130 remains in place. It will be so as long as the stock trades below Rs 100. Moreover, its intermediate and long-term trends are down. The daily as well as weekly indicators are displaying positive divergence, thus signalling at the possibility of a trend reversal.

Strong move above Rs 100 will mar the medium-term down trend and take the stock higher to Rs 130 in the months ahead. Significant resistance after this level is at Rs 150. On the other hand, failure to advance beyond Rs 100 can pull the stock down to Rs 82 and then to Rs 70-60 range in the medium-term.

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