Bharti - A Technical Look - 31 May 2009

The week that has just gone by saw a lot of news flow regarding Bharti Enterprises - particularly the renewed Bharti MTN deal. Many analysts - the fundamental analysts in particular - were preoccupied with unraveling many complex aspects of the deal such as the the financial aspect, the regulatory aspect etc.

Let us instead look at the daily price action. See the chart of Bharti (you can click on the chart to get a larger view which will be shown in a new window) . Since the news broke, the market reacted negatively for three days, and then pulled itself up in the next two days ( these two days were also days when the market went up a lot). Now the thing to notice is that the script has bounced off its support at 750 and is now poised to break through the green rectangle.

It is clear that the trend has been up. So, we accept that the trend is up and treat the most recent price action as a correction. Therefore we should look and get ready for a buy set up. This view is supported by the slow stochastic about to come out above 20 and the RSI beginning to stay above 50. Here are some specific suggestions:


1. For Aggressive traders: buy between 820 and 750, with SL at 720.

2. For Traders with moderate risk appetite: buy when Bharti closes above 875 on a daily closing basis. SL at 750.

Once the trade is taken, trailing stop loss should be employed to protect gains if and when the trade becomes profitable.