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August 20, 2011:
The stock decisively broke through its key long-term support band between Rs 2,150-2,200 by tumbling 7 per cent with good volumes last week. This decline has strengthened its medium-term downtrend. Moreover, the stock has been on a short-term trend from its July peak of Rs 2,529. Its decline can continue until it finds support at Rs 2,000, which is key base level. Trader with short-term perspective can consider holding their short positions with stop-loss at Rs 2,090 levels. Nevertheless, an emphatic move beyond Rs 2,150 will push the stock higher to Rs 2,270 levels. Next resistance is at Rs 2,350.
The stock continues to be in a medium-term downtrend trend. Strong dive below Rs 2,000 will pave the way for a decline to its subsequent significant support at Rs 1,900 in the upcoming months.
Reliance Industries (Rs 731.2)
RIL slumped almost 4 per cent last week. Reinforcing the stock's medium-term downtrend, it fell below our medium-term support level of Rs 750 and touched the first support level of Rs 722 on Friday. Short-term traders can hold their short positions as long as RIL trades below Rs 750 with this level as stop-loss. Downward targets are Rs 712 and Rs 700, which is a significant long-term support. Next medium-term support is pegged at Rs 650.
On the other hand, a strong move above Rs 750 can take the stock higher to Rs 773 and then to Rs 790 in the short term. Medium-term trend is down for the stock from its April peak of Rs 1,065. Only an emphatic close above Rs 900 will mitigate this downtrend.
Tata Steel (Rs 459.2)
Tata Steel fell 3.6 per cent last week, contrary to our expectation of a corrective up-move. However, the stock is currently testing its key long-term support level of Rs 450, from which it had bounced up in June and July 2010. Daily indicators are featuring in the deep oversold levels. If the stock's current base level provides support, it can witness a corrective up move to Rs 472 and then to Rs 485. Subsequent resistance is at Rs 500. Inability to move above Rs 472 will confine the stock to a sideways move between Rs 450 and Rs 472 in the near term. Therefore, short-term traders should tread with caution in the ensuing sessions.
A conclusive breakthrough of the stock's long-term support at Rs 450 can drag it further down to Rs 400 and to Rs 380 in the medium-term.
Infosys (Rs 2,225.4)
After moving sideways within the range between Rs 2,350-2,460, the stock plunged 5.8 per cent on Friday. The stock has tumbled 19.5 per cent in this month and 6.3 per cent for the week. It is now testing an important support at Rs 2,200 levels. Reversal from this support can lift the stock higher to its immediate resistance at Rs 2,300 and next at Rs 2,350. Next medium-term key resistances are pegged at Rs 2,400 and Rs 2,500. Conversely, failure to surpass Rs 2,300, can pull the stock lower to Rs 2,200 and then to Rs 2,172 in the near term.
Medium-term trend is down for the stock since its April peak of Rs 3,316. Decisive move below Rs 2,172 will accelerate the stock downtrend and the stock can decline to Rs 2,100 and Rs 2,000 in the months ahead.