Technical Analysis

Pivotals - Reliance Industries (Rs 801.4)

Yoganand D. | Updated on October 08, 2011 Published on October 08, 2011

After reaching our downward target of Rs 770 on Wednesday, RIL rebounded 4.5 per cent on Friday, trimming its weekly loss to Rs 6.8 or 0.8 per cent. It is facing immediate resistance at around Rs 810. A fresh long position is recommended only if the stock penetrates this resistance. Upside targets are at Rs 820, Rs 835 and Rs 850. Near-term supports are at Rs 786 and Rs 770.

Inability to move beyond Rs 835, however, will confine the stock to vacillating in a wide band between Rs 770 and Rs 835. Investors with a medium-term perspective and a high risk profile can consider buying the stock on declines with stop-loss at Rs 750. Strong close above Rs 850 can lift the stock higher to Rs 880 or Rs 900 in the medium-term. Key supports are positioned at Rs 750 and Rs 713.

State Bank of India (Rs 1,751.8)

SBI plunged Rs 159 or 8.3 per cent, emphatically breaching its key support at Rs 1900 in the previous week. After achieving our medium-term price target of Rs 1708, the stock bounced back on Friday. With the stock's recent steep fall, its weekly indicator has entered the oversold territory, signalling a possibility of a corrective upmove to Rs 1,830, Rs 1,875 or even to Rs 1,955 in the near future. However, the short-term trend remains down as long as the stock trades below Rs 1,875. Therefore, traders with short-term perspective should tread with caution in the ensuing week. Supports are pegged at Rs 1,708 and Rs 1,670.

The medium-term trend has been down from the stock's April peak of Rs 2,959 levels. Only a strong move beyond Rs 2,500 will reverse the downtrend. Significant medium-term support is pegged at Rs 1,600.

Tata Steel (Rs 419.6)

After tumbling to an intra-week low of Rs 391, the stock recovered smartly to finish the week on a positive note. We notice the formation of a bullish hammer pattern in the weekly candlestick chart, signalling selling climaxes and short-term trend reversal. Nevertheless, positive close in the ensuing week will be a bullish confirmation. As the stock is reversing upwards from a key long-term support at around Rs 400, traders can initiate fresh long positions with stop-loss at Rs 406. Targets are Rs 433, Rs 440 and Rs 453. Failure to move beyond Rs 440 will be cue for taking profits off the table.

The stock still remains in a medium-term downtrend that started from its April peak of Rs 461 levels. Strong weekly close above Rs 520 will alter this downtrend. However, decisive dive below the key support at Rs 400 will reinforce the downtrend and can pull the stock down to Rs 369 in the coming months.

Infosys (Rs 2,507)

The stock was choppy in the band between Rs 2,420 and Rs 2,575 and formed a spinning top candlestick pattern implying indecisiveness. It ended the week by declining Rs 26. However, we restate that as long as the stock trades above Rs 2,445, its near-term outlook remains positive and a rally to Rs 2,620 and Rs 2,690 is possible in the upcoming week. Traders can initiate long position with stop-loss at Rs 2,445. Conversely, a tumble below Rs 2,445 can drag the stock down to Rs 2,400 and to Rs 2,350.

The stock's medium-term trend continues to be down. Strong rally above Rs 2,700 is needed to reverse this downtrend. —

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