Technical Analysis

Pivotals: Reliance Industries (Rs 742.9)

Yoganand D. | Updated on August 04, 2012 Published on August 04, 2012

The stock rallied 3 per cent in the previous week and is currently testing the upper boundary of the sideways movement between Rs 700 and Rs 742.

Strong move above Rs 742 in the early part of the ensuing week will imply bullish momentum and the stock can rally to Rs 765 and to Rs 780.

In that scenario, traders with a short-term perspective can consider buying the stock while maintaining stop-loss at Rs 738. Important medium-term resistances above Rs 780 are pegged at Rs 792 and Rs 830.

Immediate supports for the stock are positioned at Rs 725, Rs 710 and Rs 700.

Strong fall below Rs 700 will signal that the bearish trend has resumed and the stock can roll down to Rs 670 and to Rs 650.

Infosys (Rs 2,209.3)

Infosys too advanced almost 3 per cent last week. Its daily indicators are displaying positive divergence, implying a potential trend reversal.

Traders can initiate fresh long positions if the stock climbs above Rs 2,250 while maintaining same as stop-loss. A rally to Rs 2,300 and then to Rs 2,400 is possible in the forthcoming weeks. Subsequent key resistance for the stock is in the band between Rs 2,500 and Rs 2,540.

However, medium-term trend remains down for the stock as long as it trades below Rs 2,600.

A decisive move above this level is required to alter this downtrend and push the stock higher to Rs 2,750.

Key supports for the week ahead are at Rs 2,150 and Rs 2,100. A fall below Rs 2,100 will pave the way for a decline to Rs 2,000.

State Bank of India (Rs 2,005.5)

SBI was choppy but gained 3 per cent with good volumes last week. A strong move above Rs 2,050 can push the stock higher in a corrective up move to Rs 2,100. However, short-term downtrend remains in place as long as the stock trades below Rs 2,100. Inability to rally above Rs 2,100 will confine the stock to trading in a wide range between Rs 1,940 and Rs 2,100. Conclusive move beyond Rs 2,100 will alter the stock’s downtrend and take it higher to Rs 2,170 and then to Rs 2,230. Medium-term resistances above Rs 2,230 are at Rs 2,326 and Rs 2,494.

On the other hand, breach of the support at Rs 1,940 can drag the stock down to Rs 1,900 and then Rs 1,800 in the approaching weeks.

Tata Steel (Rs 396.9)

Last week, after testing resistance at Rs 416, the stock reversed lower and is trading between Rs 390 and Rs 416. Short-term traders should tread with caution as long as the stock trades in the aforesaid band. A fall below Rs 390 will pull the stock down to Rs 380. This will strengthen its medium-term downtrend and drag the stock down to Rs 365.

Conversely, decisive jump above Rs 416 will lift the stock higher to Rs 425-430 range in the following weeks. An move above Rs 440 is needed to reverse the stock’s downtrend and take it northwards to Rs 470.

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