Pivotals: Week- May 16: Reliance Ind, SBI, Tata Steel and Infosys :: Business Line

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Reliance Industries (Rs 948.6)

The stock vacillated between Rs 938 and Rs 965 in the previous week and finished on a negative note, declining by Rs 6. From its April peak of Rs 1,065, the stock has been on a short-term downtrend. This trend stays intact as long as the stock trades below Rs 1,010. However, the stock is finding near-term support around Rs 940 and has been moving sideways in a narrow band over the past eight trading sessions. It can prolong this sideways movement in the days ahead. Hence traders should tread with caution. Only a strong fall below Rs 938 will signal that the stock has become weak and it can decline to Rs 920 or Rs 900 in the short-tem. In that case, traders can initiate fresh short position.

On the other hand, move beyond Rs 965 can extend the corrective up move to Rs 981. RIL has significant resistance in the band Rs 1,000 and Rs 1,010. Next is at Rs 1,040.

State Bank of India (Rs 2,642.9)

SBI was choppy and formed a spinning top candlestick pattern in the weekly chart signalling indecisiveness. Shortterm trend is down for the stock from its April 25 peak of Rs 2,959. The stock is currently facing key resistance in the band between Rs 2,700 and Rs 2,720.

Inability to rally beyond this band will reinforce its shortterm down trend. Short-term traders can initiate short position if the stock reverses from the key resistance level with stop-loss at Rs 2,720. Downward targets are at Rs 2,600, Rs 2,550 and Rs 2,500.

Conversely, an emphatic move above the resistance can lift the stock to Rs 2,800 and to Rs 2,850 in the short-term. The stock’s medium-term trend is down. Strong break through of its medium-term support at Rs 2,500 will drag the stock lower to Rs 2,400 or Rs 2,350 in the ensuing weeks.

Tata Steel (Rs 594)

Tata Steel ended the week at the same level after oscillating between Rs 583 and Rs 602. We also see spinning top candlestick pattern in the weekly chart, indicating indecision in the near term. The stock is trading above its key support band between Rs 580 and Rs 583. We reiterate that traders should be cautious as long as this support band provides base. Only strong decline below this support will strengthen its short-term downtrend that has been in place since early April peak of Rs 641. It can decline to Rs 565 and then to Rs 552. On the other hand, the stock will face resistance Rs 610.

Surpass of this level will take the stock higher to Rs 630-640 range in the short-term.

Infosys (Rs 2,880)

Infosys moved sideways, testing its support around Rs 2,900 last week. As mentioned, the stock moved sideways in the range between Rs 2,830 and Rs 2,850 and continued its sideways consolidation. Therefore, traders should stay cautious until the stock moves out of this range in either direction.

Since peaking out in January 2011, the stock has been on a medium-term downtrend. It is hovering well below its 50-and 200-day moving averages. Only a strong move above Rs 3,200 will mitigate this downtrend. Supports for the weeks ahead are at Rs 2,800 and Rs 2,750. Resistances are positioned at Rs 3,050 and Rs 3,150.