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After testing the upper boundary of the sideways consolidation phase at Rs 885, the stock started declining. The stock’s fall can extend and test the lower boundary at Rs 840 in the forthcoming weeks. Volumes in the daily chart are diminishing. Indicators are sloping downwards and are on the brink of entering the bearish zone. Traders with a short-term perspective should tread with caution as long as the stock hovers between Rs 840 and Rs 885. A decisive downward breakthrough will reinforce bearish momentum and drag the stock down to Rs 820 and then to Rs 800. Next key support is pegged at Rs 770.
A conclusive rally above Rs 885 is required to strengthen the bullish momentum and accelerate the stock northwards to Rs 900 and Rs 915. Medium-term prospects continue to be in sideways consolidation between Rs 770 and Rs 930.
State Bank of India (Rs 1,743.5)
SBI plunged 6.4 per cent for the week, following its failure to surpass a critical resistance at Rs 1,920. With this fall, the stock has formed a bearish engulfing candlestick pattern in the weekly chart indicating a short-term trend reversal. Further, the daily moving average convergence divergence indicator has displayed a negative divergence backing the downward reversal. Therefore, traders can initiate short positions or hold short positions with stop-loss placed at Rs 1,810. Downside targets are Rs 1,675 and Rs 1,600. Only a strong fall below Rs 1,600 can drag the stock down to Rs 1,500 in the medium-term.
Conversely, an emphatic rally above Rs 1,810 will give scope for an up-move to Rs 1,900 or Rs 1,920. The stock needs to break the key resistance at Rs 1,920 to reach Rs 2,015 and then Rs 2,065.
Infosys (Rs 3,373.8)
Dull movement continued in Infosys as it remained within the sideways range between Rs 3,250 and Rs 3,450. Only a conclusive break on either side will decide the stock’s short-term trend. A decisive upward breakout will take the stock higher to Rs 3,500 and then to Rs 3,600 in the coming months. Resistance ahead is at Rs 3,400 and support at Rs 3,295.
On the other hand, a decisive fall below Rs 3,250 will pave the way for a decline to Rs 3,150 and to Rs 3,000 in the short-term. Investors with a medium-term perspective can prolong their long positions while maintaining a stop-loss at Rs 2,800 levels. Important medium-term supports for the stock are placed at Rs 2,700 and Rs 2,550 levels.
Tata Steel (Rs 415.4)
The stock was choppy and fell 1.5 per cent in the previous week. However, short-term trend remains up as long as the stock trades above Rs 370. Immediate supports are placed at Rs 400 and Rs 386. If the first support holds, the stock will be confined to moving sideways between Rs 400 and Rs 423. A strong move above Rs 423 is required to strengthen the uptrend and take the stock northwards to Rs 440 and Rs 450 levels in the short-term.
On a downside, strong decline below Rs 400 can extend the correction further to Rs 386. The stock has been on a medium-term uptrend since its early-August low of Rs 195. Investors with medium-term horizon can consider holding their long positions with stop-loss at Rs 320.
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