Friday, January 7, 2011

Update on State Bank of India

       Bear Raid on SBI !
The last post itself was titled 'The New Year Party's Over ?' indicating further loses on Thursday. The banking sector lost further on Thursday. As a matter of fact, the SBI stock has closed below it's 200 day moving average for the first time in eleven months.  

State Bank of India - Daily Chart with DMAs

SBI has broken the two year old support line ( see the top panel of the chart as well as the weekly chart below ) two days back and has closed below below it's 200 DMA of 2662 as on Thursday. The next major supports are seen at the 2400, 2300, 2200 and 2000 levels. This update is not published as a trade recommendation but to remind long term investors that SBI would be good pick at around the 1800 to 2000 levels if available.

SBI  Weekly Chart

The weekly chart of SBI shows the break of the long term support line which originates from the start of this  bull phase in March 2009. 

We had indicated many a times in the past ( please see the links below ) that RBI has not been effectively managing the rising inflation expectations in the economy and this factor may turn out to be road block to the bull market. We had also purposefully omitted recommending the SBI stock in the last edition of Nifty heavy weights because of the expected rise in interest rates. 

Nifty Heavies Revisited !

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