Wednesday, February 27, 2008

Bears are in control of India telecom stocks

Bharti Airtel:

The stock is bearish in both short term and medium term charts. Volumes have gone up considerably during the last four months while prices continue to fall. The stock had broken the medium term support at 750 during January. Absence of typical chart patterns indicate uncertainty and medium term investors may consider exiting at higher levels.

Idea Cellular:

This stock too has turned bearish. During the week ending January 25 it had closed below the support trendline. The stock will face strong resistance around 130 during the pullback rally. However, one may consider a short term investment if it closes above 114.40.


Mahanagar Telephone Nigam
:

During the month of January, the stock had lost 38% and almost tested the previous low (long term support) at 108.25. It had also broken the medium term support at 128.80 during the week ended February 1. The harami candlestick pattern formed during the week ending February 15 could not be confirmed last week. This stock too, is bearish for medium term.


Reliance Communications
:

RCOM has formed a bearish "double top" in medium term charts. It had also formed a bearish three outside down pattern at the second peak. It has now broken the support trendline thrice but has not closed below it. A technical rally upto 726 cannot be ruled out and this should be used only to exit the stock. The declining volumes near the second peak followed by break below 726 confirms the pattern formation.


Tata Communications (VSNL)
:

The stock had completed the five waves and wave ‘a’ started during the first week of January. As such, there are no reversal signs and when the wave ‘b’ commences it will have a technical target of 645 i.e. 61.8% retracement. In this chart it can be observed that the low of wave 4 has fallen below the high of wave 1. From a short term perspective there is a strong resistance at 563.

Tata Teleservices (Maharashtra):

This stock had broken the support trendline but has not closed below it. The commencement of wave ‘b’ may be confirmed by a strong reversal signal. As such the stock is bearish. When wave ‘b’ commences it is likely to hit 50 which is the 61.8% retracement from considering a high of 64.95 and a low of 26.