Sizzling Stocks: Mahindra & Mahindra (Rs 740)

The stock skyrocketed 13 per cent with good weekly volume, thus completely engulfing the down candlestick in the weekly chart from the week before. While rallying, it decisively breached its key medium-term resistance at Rs 700 and crossed over its 200-day moving average around Rs 710. However, the stock is currently facing its significant next medium-term resistance in the band between Rs 750 and Rs 760. Strong close above this band will lift the stock higher to Rs 800-810 range in the medium-term.

On the other hand, inability to exceed beyond the Rs 750 and Rs 760 band will pull the stock down to its immediate support level of Rs 700 in the near term. A fall below Rs 700 will once more drag the stock down to Rs 630-640 range in the medium-term. Subsequent key support is at Rs 600.

Tata Power Company (Rs 1,088.3)

Tata Power nose-dived almost 12 per cent last week, emphatically breaking through its significant long-term support level at Rs 1200. Since October 2010 peak of Rs 1465, the stock has been on an intermediate-term downtrend. In first week of August, the stock conclusively breached its 200 and 50-day moving averages and is now trading well below the two levels. There has been an increase in volumes over the past five trading sessions. It is now testing its support at Rs 1,100. The daily relative strength index has reached oversold territory.

Moreover, the stock has breached its Bollinger Bands lower boundary. This signals that the stock may be oversold and could be due for a near-term corrective up move. A reversal from current levels will encounter resistance at Rs 1,150 level. Next key resistance is pegged at Rs 1,200. Failure to move above Rs 1,150 will pull the stock down to Rs 1,050 levels. Support below Rs 1,050 is in the Rs 970-1,000 band. If the stock's support band fails to hold in the medium term, it can witness a free fall to Rs 800 levels.

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