Technical Analysis

Sizzling Stocks - Essar Oil (Rs 62.4)

Yoganand D. | Updated on November 15, 2017 Published on January 28, 2012

Following the company's announcement of an increase in gas reserves and resources at its Raniganj CBM Block, the stock jumped 16.5 per cent on Tuesday. Holding these gains, the stock ended the previous week up 20 per cent. But the stock is currently testing key resistance at Rs 64. A decisive penetration of the resistance level will indicate that the stock will continue to be in a nascent short-term uptrend. In that case, the stock can trend higher and reach Rs 73 and then move to Rs 86 in the medium-term.

But failure to move above Rs 64 will pull the stock down to Rs 53, floor of the gap formed recently and then to Rs 45. A strong dive below Rs 45 will reinforce the stock's intermediate-term downtrend that has been in place since November 2010 peak of Rs 161 and drag the stock down to Rs 39. A strong jump above Rs 105 is required to alter the stock's downtrend.

Sesa Goa (Rs 213.7)

Sesa Goa advanced 12.8 per cent accompanied by good volume last week, after announcing its December quarter results. The stock has been on an intermediate-term downtrend from its April 2010 peak of Rs 494.

However, since its 52-week low of Rs 148 registered on December 20 last year, the stock has been on a short-term uptrend. This trend reversal was triggered by positive divergence in the daily moving average convergence divergence indicator and weekly relative strength index.

The stock is on the brink of testing its significant long-term resistance band between Rs 218 and Rs 230 in the upcoming weeks. A strong breakthrough of this resistance band will lift the stock higher to Rs 260 and Rs 290 in the medium-term. But the inability to move above Rs 230 can pull the stock down to Rs 190 and to Rs 170 in the medium-term. Subsequent support is at Rs 148.

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