Technical Analysis

Medium-term turns positive for RIL

Yoganand D. | Updated on August 11, 2012 Published on August 11, 2012

Reliance Ind (Rs 782)

RIL jumped 5 per cent breaking through its upper boundary at Rs 742 in the previous week. This up move was accompanied by good volumes.

The stock has breached its 200-day moving average and is trading well above 50 and 200-day moving averages. With this, the stock appears to be out of the woods from a medium-term perspective.

Traders with a short-term perspective can continue holding their long positions while maintaining stop-loss at Rs 760.

The stock can prolong its up move and reach our price targets at Rs 800 and then Rs 830 in the forthcoming weeks.

But failure to rally above Rs 800 will be the cue for taking profits off the table and remain in the sidelines. Immediate support for the stock is positioned at Rs 755 and next at Rs 742. A fall below Rs 742 will diminish the stock’s current bullish momentum and pull the stock down to Rs 725, Rs 710 and Rs 700.

Infosys (Rs 2,313.1)

Infosys rallied almost 5 per cent with slight increase in weekly volumes in the previous week.

This up move was in line with our expectations and the stock achieved our first target at Rs 2,300.

Traders with a short-term horizon can consider holding their long positions with stop-loss at Rs 2,250. Targets are Rs 2,400 and Rs 2,444, ceiling of recent gap formed in July.

Next resistance is pegged in the zone between Rs 2,500 and Rs 2,540.

Nevertheless, the stock continues to be in medium-term downtrend as long as it trades below Rs 2,600.

Strong move above this level will reverse the downtrend and take the stock northwards to Rs 2,750 in the medium-term. Supports for the week ahead are positioned at Rs 2,200, Rs 2,150 and Rs 2,100.

State Bank of India (Rs 1,887.9)

Following an initial up move, the stock reversed lower and tumbled 6 per cent breaking through key support at Rs 1,940 last week.

Moreover, the stock has breached its 200-day moving average and is hovering well below it. With this decline, the stock has resumed its short-term downtrend and is heading towards support at Rs 1,800.

Traders can retain their short positions with stop-loss at Rs 1,940.

Downside targets are Rs 1,800 and Rs 1,715.

However, the stock has to make a decisive downward breakthrough of Rs 1,800 to reach Rs 1,715.

Traders should tread with caution around Rs 1,800.

Medium-term trend has been down for the stock since its February 2012 peak at Rs 2,474. An emphatic fall below Rs 1,800 will reinforce bearish momentum and drag the stock down to Rs 1,715 and then to Rs 1,600 in the medium-term.

Key resistances above Rs 1,940 are at Rs 2,000 and Rs 2,100.

Tata Steel (Rs 400.4)

The stock moved sideways in the past week and is trading within the range of Rs 390 and Rs 416.

We restate that traders should tread with caution as long as the stock hovers in this range.

A conclusive decline below Rs 390 will drag the stock down to Rs 380 and also reinforce its medium-term downtrend. Next key support is at Rs 365.

On the other hand, the stock has to break through Rs 416 to accelerate to the resistance zone at Rs 425 and Rs 430. Strong rally above Rs 440 is required to alter its downtrend and push it higher to Rs 470 in the medium-term. – Yoganand D.

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