Gems Status

October 1, 2011:  

Reliance

Following an intra-week low at Rs 748 on Monday, the stock bounced back and finished the week with almost 5 per cent in gains. The stock has an immediate resistance at Rs 835 and next at Rs 850. An inability to surpass the first resistance will be a cue for initiating fresh short positions with stiff stop-loss. Downward targets are Rs 786 and Rs 770.

As long as the stock trades below Rs 850, its near-term outlook remains gloomy. Fresh long positions are recommended only if the stock moves emphatically beyond Rs 850. It can then rally to Rs 880 or Rs 900 in the months ahead. However, the medium-term trend continues to be down for the stock. A strong close above Rs 900 is required to reverse this trend and take it higher. Medium-term key supports are at Rs 750 and Rs 713.

State Bank of India (Rs 1,911.1)

The volatility in the stock continued last week as well and it retreated 2 per cent. However, it persists to test its long-term significant support at around Rs 1,900 with negative bias. Traders with a short-term perspective can hold their short positions with stop-loss at Rs 1,955 levels. Downward targets are Rs 1,850 and Rs 1,800. Near-term resistance is at Rs 2,010 and subsequently at Rs 2,080.

The stock has to conclusively climb over Rs 2,080 to signal that its short-term trend is turning positive. The next key resistance is at Rs 2,150. The medium-term trend is down for the stock since its April peak of Rs 2,959 levels. A strong weekly close above Rs 2,500 is needed to indicate that its medium-term trend has turned positive. On the other hand, in the medium-term, a decisive drop below Rs 1,800 can drag the stock lower to Rs 1,726 or Rs 1,708.

Tata Steel (Rs 415.2)

In line with our expectations, the stock declined last week and plunged 4 per cent. The short-term trend is down and the forecast is also down. The stock is trading well below its 21- and 50-day moving averages. Daily as well as weekly indicators are featuring in the bearish zone. Traders can consider holding their short positions with stop-loss at Rs 432. Targets are at Rs 410, Rs 400 and Rs 390. A failure to decline below Rs 400 will be sign for taking profits off the table. Resistances for the week are at Rs 440, Rs 460 and Rs 475.

The stock appears to have resumed its medium-term downtrend that has been in place ever since its April peak of Rs 641. A decisive breach of Rs 400 can pull the stock down to Rs 369 in the medium-term.

Infosys (Rs 2,533.8)

Last week, the stock penetrated its key resistance at Rs 2,400 which it had been testing from September 15. It has zoomed 8 per cent with good weekly volumes. The short-term trend is turning positive. As long as the stock trades above Rs 2,445, its near-term stance stays positive and the stock can rally to Rs 2,620 and Rs 2,690 in the forthcoming weeks. However, fall below Rs 2,445 will pull the stock down to Rs 2,400 and Rs 2,350. Next important support is at Rs 2,200.

Medium-term trend, though, is still down for the stock. Only a strong move above Rs 2,700 will change the trend.