The Hindu Business Line : PIVOTALS — Reliance Industries (Rs 2,100.05)

The bonus announcement that was expected to give a fillip to the sentiment on the RIL counter could not take the stock past the resistance at Rs 2,200. A three-wave move has been completed from the July 13 low in September and the sideways move witnessed since then could be a terminal corrective before the down move resumes to drag the stock down to our medium-term targets of Rs 1,727 or Rs 1,667. A strong close above Rs 2,200 is needed to signal an impending move higher to Rs 2,500.

The short-term trend in the stock is down but there is a strong support at Rs 2,070 where the 50-day moving average as well as the short-term trend line is positioned. Fresh shorts are therefore recommended only on a strong move below Rs 2,070. Subsequent targets are Rs 2,050 and Rs 2,010. Resistances for the week are Rs 2,163 and Rs 2,200.

SBI (Rs 2,066)

SBI led the market lower with 6 per cent decline last week. An evening-star pattern is apparent in the weekly chart that is a top reversal pattern. However, the decline needs to prolong below Rs 1,960 before alarm bells are sent trilling. First target of the intermediate term up-move from March lows is Rs 2,155 and then Rs 2,553. Since the first target has been achieved, the up-trend can terminate here. But we will retain a positive medium-term view as long as the stock holds above Rs 1,935.

The short-term outlook for SBI is negative and weaknesses in daily oscillators imply that the stock can decline to Rs 1,964 or Rs 1,890 in the near-term. Short-term traders can initiate fresh shorts in rallies with a stop at Rs 2,170.

Tata Steel (Rs 532.6)

Tata Steel did not decline below the key support at Rs 494 indicated in our last column and reversed higher to close 4 per cent higher. Short-term range for the stock is between Rs 490 and Rs 550. Since the stock has reached the upper end of this trading range, traders ought to be careful with long positions since it can reverse from here and decline to Rs 490 again. Fresh longs are recommended only on a strong close above Rs 550. Subsequent targets are Rs 560 and Rs 580.

Medium-term trend for the stock is positive and swing traders can hold the stock with a stop at Rs 490. Consolidation between Rs 490 and Rs 550 can be followed by a break-out to Rs 660.

Infosys (Rs 2,178.3)

Infosys followed our script closely, reversing lower from the peak of Rs 2,352 to decline towards our second target. A strong short-term down-trend has been established by the 14-day relative strength index declining to Rs 44 and the 10-day rate of change oscillator declining to the negative zone. The stock is however halting just above the 50-day moving average and a brief pull-back is possible from here that takes Infosys to Rs 2,324 or Rs 2,415.

Fresh shorts can be initiated on a failure to move above the first resistance. Downward targets would be at Rs 2,123 and Rs 2,061. We retain a positive medium-term view as long as the stock holds above Rs 1,900.

ONGC (Rs 1,220)

ONGC plodded higher to close at the upper end of its short-term trading range. As indicated earlier, a strong move past Rs 1,230 will take the stock higher to Rs 1,350 or Rs 1,390 whereas a reversal from current level can cause a decline to Rs 1,135 again. Traders can therefore initiate fresh long positions only on an emphatic move above Rs 1,230.

Maruti Suzuki (Rs 1,474.8)

Maruti Suzuki took a 11 per cent tumble last week resulting in bearish top reversal pattern in the weekly candlestick chart. The stock needs to close above the peak of Rs 1,740 over the next couple of weeks to avert the commencement of a medium-term downtrend. Short-term traders can hold with a stop at Rs 1,420. The medium-term view will however be roiled if only on a close below Rs 1,250. — Lokeshwarri S.K.

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