Tuesday, August 13, 2013

SBI declared Q1 results below market expectations but what next??

By Waves Strategy Advisors, For more information please visit www.wavesstrategy.com
Aug 13(Reuter)-SBI Q1 net falls 14% on higher provisions against bad loans and increased NPA by 37%. The stock was down by more than 3% after the results were declared. 
The short term spike can be contributed to the event but please understand that trading based on outcome of result is not the correct strategy…

Results measure the past performance of the company whereas stock prices discounts what is expected in the future. This is exactly the reason why the event only leads to short term movement but gradually the bigger trend resumes.

Technically, prices gave break out of the Wedge pattern in the start of the June itself and moved lower sharply. This is the power of simple technical analysis which helped to take the position before news arrived.

SBI daily chart

Yesterday SBI was down by almost 3% and many fundamental analyst might now come out with sell rating on the stock when it has already fallen by more than 35% from the top of 2450 in June. So a sell at current levels is not a good strategy and technical indicators are showing extreme oversold state in this stock. Timing is one of the key to make money by trading in stock market.

As we can see on Daily Chart, once SBI has given “Wedge” Pattern breakout we have seen serious sell off.  We have captured this move very well and mentioned in our daily report “TheFinanacial Waves STU” about the breakout and it moved in lines with our expectations.     
Leading momentum indicator RSI is working very well in this stock. Prices have reversed 6 times from the 25 levels. Wedge pattern target was at 1571 and SBI’s recent low was 1575. CurrentlySBI is moving at crucial levels of 1600.
As per wave perspective, prices has completed wave E at 2430 levels and achieved the wedge target on downside. The stock is in matured stage of down move. To know what is next for State Bank of India (SBI) along with crucial levels get access to the daily research report “The Financial Waves” and also know the major trend for Nifty along with other stocks.
Do not wait for outcome of an event and trade objectively. For more information visit www.wavesstrategy.com write to us at helpdesk@wavesstrategy.com or call on +91 22 28831358 / +91 9920422202

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