Tech­in­cal trend shows lim­ited down­side

The Pak Banker - - Front Page -


Re­liance In­dus­tries has been trad­ing in the range of 680-900 lev­els for the last 15 months, af­ter it has bro­ken the pre­vi­ous trad­ing range of 900-1150 lev­els in the month of June 2011. The stock has wit­nessed strong buy­ing in­ter­est at its 3-year lows of 680 and staged a sharp bounce back to­wards the up­per end of 900 lev­els. How­ever, the stock failed to breach the re­sis­tance and slipped to its 200 Day EMA at 790 lev­els, due to profit tak­ing at higher lev­els. We ex­pect the stock to re­main in the range of 700-900 lev­els in the next few months be­fore it breaks the range on the up­side. The down­side in the stock seems to be lim­ited, as the on­go­ing share buy-back could sup­port the stock on de­clines.

The short-term mo­men­tum in­di­ca­tors viz. Stochas­tic and RSI on daily charts sug­gest the stock likely to re­main weak and could slip to its strong sup­port of 750 lev­els. How­ever, longer-term charts sug­gest that any de­cline in the stock price must be uti­lized for ac­cu­mu­lat­ing long po­si­tions. The stock could face re­sis­tance at its 200 Week EMA at 850-870 lev­els. On the down­side, 680-700 lev­els could be a strong sup­port zone for the stock. We ex­pect the stock to con­sol­i­date in the range of 680-900 lev­els for the next cou­ple of months. Thus, we sug­gest an in­vestor to ac­cu­mu­late the stock on any de­cline to 720750 lev­els for up­side tar­gets of 850-900 lev­els in medium term. In the long term (12-18 months), we ex­pect the stock to break-out of its higher range of 900 and is likely to rally to­wards 1100 lev­els.

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