Stock in focus : RIL

Small moves - Big differences 

The script RIL is the largest one by weight in the market index. A major factor in pulling down the Sensex in the past week apart from the banking stocks has been RIL.

But the way it has moved since the past 1-1/2 years, it would be a headache for a fund manager who targets capital appreciation by holding stocks in the portfolio for a long time.

But for traders, the stock has provided excellent opportunities by being predictable at key support-resistance zones. 

If one looks at the chart, the prices have been between 900 and 1120 almost for 18-20 months.

Bounce backs have happened from exactly the above mentioned bands. 

Technically, this indicates that they are strongest support and resistance zones.

There is also an intermediate support at 950-955 levels.

Currently, the prices are facing resistance from the downward sloping trendline at 1040 levels.

A breakout from this can be very positive for the stock. (will update on this later)

The prices in the oversold zone, the 955 support will be the max downside for the stock as of now.

Jindal Steel:

This is a carbon-copy of RIL and should need no more explanation :)

On the markets.....

The RBI rate hikes of 50bps was much in expectation. The savings deposit rate hike of 50bps was a stunner which dragged the banking, auto and the realty sectors that are rate sensitive. The RBI decision must be lauded as its taking the right steps to control inflation even if it affects short term market movements.

Technically, sensex should find good support near the 18312 zone (if it comes). A close below that would be bearish for the markets. 

Select stocks that are beaten down in the past week and are back to the support zones.

Jaiprakash Associates, Jain Irrigation, Lupin (approaching the breakout earlier), etc. look good on the charts. Will update on them soon as positive confirmation is seen. 

Focus on Pharma, FMCG sectors for picks. Risky traders can look for beaten down banking stocks too but with tight stoplosses.

The RSI shows oversold levels very fast which indicates that the downside should be limited to the above level.

My take: The sensex, capped between the up and the down sloping trendlines, is heading towards the tip of a huge symmetrical triangle pattern which shall breakout eitherways in about 10-12 days.