Technical Analysis

Pivotals - Reliance Industries (Rs 805.4)

Yoganand D. | Updated on September 03, 2011 Published on September 03, 2011

RIL rebounded almost 12 per cent last week, breaching its 21-day moving average. The stock's reversal is backed with a positive divergence in the daily relative strength index and moving average convergence divergence indicators. However, the stock will face twin resistances, a key resistance and medium-term downtrend line at around Rs 835 in the days ahead. Subsequent resistance is at Rs 850.

Short-term traders can consider buying the stock in dips with stop-loss at Rs 785. Upside targets are Rs 835 and then Rs 850. Key resistance above these levels are at Rs 873 and Rs 900. Supports for the week ahead are positioned at Rs 765, Rs 730 and Rs 700.

Medium-term trend continues to be down for the stock since its April high of Rs 1,065. Strong move above Rs 900 is required to negate this downtrend and lift the stock higher to Rs 950 and Rs 1,000 in the medium-term. However, a conclusive dive under Rs 700 can drag the stock down to Rs 650 in the same time frame.

State Bank of India (Rs 1,993.9)

In line with our expectation, the stock moved higher from its key long-term buttress in the previous week. It has surged 5.6 per cent. Daily indicators are recovering from the oversold territory. Traders with short-term horizon can initiate long position in the stock while maintaining stop-loss at Rs 1,950. Targets are Rs 2,080 and Rs 2,150 levels. Inability to move beyond Rs 2,080 will result in the stock vacillating in zone between Rs 1,870 and Rs 2,080 in the upcoming week.

Nevertheless, fall below the significant long-term support band between Rs 1,870 and Rs 1,900, will reinforce the medium-term downtrend which has been in place since late April this year. The stock can then decline further to Rs 1,750 and then to Rs 1,600 in the medium-term. Key medium-term resistances are pegged at Rs 2,300 and Rs 2,500.

Tata Steel (Rs 488.5)

Tata Steel skyrocketed 15.7 per cent last week. This reversal has been triggered by a positive divergence in the daily relative strength index. However, the stock is currently at important medium-term resistance at Rs 500. Failure to exceed this level can result in a corrective decline in the stock to Rs 475 or then to Rs 450 level. Traders should tread with caution as long as the stock trades below the aforesaid resistance.

Strong breakthrough of the resistance at Rs 500 will take the stock higher to Rs 520 and then to Rs 547 in the forthcoming weeks.

Medium-term trend is still down for the stock. A strong move above Rs 550 is required to reverse this trend and take the stock northwards to Rs 590 levels. Significant supports below Rs 450 are at Rs 420 and Rs 410.

Infosys (Rs 2,315.5)

The stock advanced Rs 111 or 5 per cent in the previous week. After filling the gap formed on August 19, it is struggling to surpass the resistance at Rs 2,350 level. Traders can initiate fresh short position if the stock reverses down from this resistance level with stop-loss at Rs 2,370. The stock can once more decline to Rs 2,200 and then to Rs 2,169 levels in the ensuing week. Next key resistance is at Rs 2,400. Only an emphatic jump beyond Rs 2,400 will lift the stock higher to Rs 2,500.

The stock continues to be in a medium-term downtrend from its April peak of Rs 3,300 levels. Decisive weekly close below Rs 2,169 levels will pull the stock down to Rs 2,100 and to Rs 2,000 in the forthcoming weeks.

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