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. 

A View to the Nifty Fundamentals ... ! 

Some Thoughts on Interest Rates   

Nifty Heavies Revisited !

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Update for 6th January 2011

       The New Year Party's Over ?

 

Banks played spoil sport for the second day in succession on the back of the increasing awareness in the market about the need for further increases in the interest rates in the economy. We had indicated in the previous post that any more damage to the charts of the banking sector sector stocks would seriously affect the present uptrend itself in the new year. It seems that the time  to decide the fate of the present uptrend  has arrived by now. Any further decline in the Nifty futures might force the Momentum Signal system to indicate an exit of long positions.

Nifty futures opened slightly lower on Wednesday at 6151 and this open became the high of the day later on. Almost immediately on the open, Nifty futures went to trade below the previous day's low and never tested the open. The contract traded in a tight range between 6120 and 6140 for most of the morning session. It broke below the 6120 mark and tested the previously indicated reference level of 6090 in the afternoon. It recovered to 6120 from the support at 6090, but closed lower at 6098 for the day.

Nifty Futures - Intra-day Chart