Technical Analysis

High Five

Yoganand D | Updated on November 22, 2014 Published on October 26, 2014

Tata Steel (₹459)

The stock of Tata Steel gained more than 2 per cent in the midst of volatile trade last week. It continues to hold its significant support in the zone between ₹440 and ₹450. However, to alter the downtrend that has been in place from the July 2014 peak of ₹570, the stock needs to decisively rally above ₹520 levels. It also faces key resistances at ₹480, ₹500 and ₹510 levels. Any failure to move past ₹480 can pull the stock down to its key support at ₹440. A strong close below ₹440 can strengthen its downtrend and take the stock down to ₹426, ₹410 and ₹400 in the weeks ahead. At this juncture, traders with a short-term perspective should tread with caution and desist trading in the stock. Investors with a medium-term horizon too can remain on the sidelines for now.



SBI (₹2,582.3)



The stock extended its near-term uptrend and advanced 2 per cent in the truncated week. It has breached its 21- and 50-day moving averages. The indicators on the daily chart are on the brink of entering the bullish zone. But the stock met with resistance at ₹2,600, which is the upper boundary of the sideways consolidation band of ₹2,350 and ₹2,600. A conclusive break-out of the band can push the stock northwards to ₹2,750 and then to ₹2,850 in the medium term. In such a scenario, investors with short- and medium-term perspectives can initiate long positions, with stop-loss at ₹2,550. Inability to move past the upper boundary will see the stock hovering within the sideways range. Key supports are at ₹2,450 and ₹2,350. A breach of the lower end of the range will drag the stock down to ₹2,250 and ₹2,100.



ITC (₹350.5)



The stock of ITC resumed its downtrend and fell almost 2 per cent last week. It has been on a short-term downtrend since the late September peak of ₹379. It now hovers well below its 21- and 50-day moving averages. This downtrend will continue as long as the stock trades below the ₹365 levels. However, the stock’s key support at ₹344 is cushioning its fall and in the near term it can move within a sideways band of ₹344 and ₹365, albeit with a negative bias. Hence, traders with a short-term perspective can consider initiating fresh short positions in rallies with a stop-loss at ₹365. A downward reversal from the resistance level can drag the stock down to ₹344 and then to ₹340 in the ensuing week. Declines below ₹340 can find support at ₹330. Significant resistances to note above ₹365 are at ₹370 and ₹380.



Infosys (₹3,805.8)



The stock remained under pressure, witnessing some profit booking and closed on a negative note in the previous week. This selling pressure can continue in the near term too. The stock is now testing its support at ₹3,800 levels. Therefore, investors can consider taking profits off the table at this juncture and stay on the sidelines for a while. Significant resistance for the stock is pegged in the zone between ₹3,950 and ₹4,000. The stock needs to emphatically break out from this band, to rally to ₹4,200 levels or higher. However, inability to do so can pull the stock down to ₹3,700 in the near term. A strong fall below the immediate key support at ₹3,700 can drag the stock down to ₹3,600 in the coming weeks. The medium-term uptrend will be in place as long as the stock trades above its significant long-term support at ₹3,450.



RIL (₹952.9)



Last week, the stock tested its immediate support at ₹920, recording an intra-week low at ₹912, but bounced back subsequently. The medium-term trend has been down for RIL since encountering resistance at ₹1,140 in May. The short-term trend in the stock is down too. It now trades sideways between ₹920 and ₹970. An emphatic dive below ₹920 can pull the stock down to ₹900. And a decline below the significant support at ₹900 can drag the stock down to ₹870 and then to ₹850 in the medium term. Hence, traders with a short-term perspective can make use of rallies to initiate short positions with a stop-loss at ₹970. Key resistances are at ₹960, ₹980 and ₹1,000. A strong rally above ₹1,040 is required to alter the downtrend and take the stock higher to ₹1,070 or ₹1,100 in the medium term.



















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