Mindtree (Rs 1,421)
Mindtree’s performance in the December quarter failed to meet market expectations. The stock tumbled 13.8 per cent and closed below its 21-day moving average which is currently at Rs 1,553 . The stock, however, is in a strong long-term uptrend and last week’s decline has paved the way for a corrective fall.
The 21-day moving average will now act as a good short-term resistance level for the stock. As long as the stock trades below this resistance, it can fall to Rs 1,340 in the coming weeks.
This is the 38.2 per cent Fibonacci retracement support level.
A move in either direction from this level will decide the trend thereafter. A bounce back from Rs 1,340 can take the stock higher to Rs 1,550. The stock needs to decisively close above Rs 1,550 to signal a bullish outlook. On the other hand, break below Rs 1,340 will drag the stock lower to Rs 1,235. Such a fall can be a good buying opportunity for investors with a long-term perspective.
Indian Oil Corporation (Rs 224)
The stock of Indian Oil Corporation surged by 12.1 per cent last week after the government approved a 10 per cent stake sale in the company. The stock has been on a downtrend since its high of Rs 375 in January 2013. It is now signalling a reversal. It has formed a strong base near Rs 200 since October 2013. Important supports are at Rs 209, its 21-week moving average, and at Rs 195.
Key resistance is at Rs 235.
The inability to breach this resistance can keep the stock in a sideways range between Rs 195 and Rs 235 for a few more weeks. On the other hand, a strong break above Rs 235 will be bullish for the stock, which can take it higher to Rs 255 . This is the next significant resistance level. An interim pull back to Rs 235 is possible, if the stock is unable to breach this resistance . However, the outlook would continue to remain bullish. Fresh buying interest can emerge near Rs 235. The target on a strong breach of Rs 255 is Rs 290.
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