Technical analysis

Infosys Technologies (NASDAQ: INFY) is an Indian IT services firm that develops custom software
and provides business process outsourcing (accounting, HR, IT) for large corporations. Infosys has
been a prime beneficiary of the outsourcing boom that has taken place in India throughout the
2000s. In past year Infosys share prices have seen drastic changes. For example on 13
th
March
2014, Infosys share fell over by 8.5% as the company expected sluggish growth in the March quarter
due to muted spending by clients, especially in the retail sector.
In the sections below, some techniques are used to find whether to sell or buy the stock, as on 1
st

July 2014.
Simple moving average
For SMAVG, we have taken three values: 50, 100 & 200

SMAVG (50):
We have taken average of closing prices of last 50 days. This is a short term average which
responds quickly to price changes. This value acted as a support price for the period July13 to
March14. Whenever the share price touches SMAVG (50), the direction of price change reverses
and the prices starts increasing. Between March14 and mid-June14, we were unable to do any
analysis using SMAVG (50), as the share prices took a heavy fall on 13
th
March14. After 13
th

June14, SMAVG (50) is again acting as a support price for Infosys shares.
SMAVG (100):
We have taken average of closing prices of last 100 days. We could do any analysis from SMAVG
(100).
SMAVG (200):
We have taken average of closing prices of last 200 days. This is a long term average which
responds slowly to price changes. From July13 to April14 we could not do any analysis using
SMAVG (200). After May14, SMAVG (200) acted as ceiling. We can see two peaks in share prices
in May14 and June14, which after touching SMAVG (200), the prices starts falling.
New trend:
We can see the stock price oscillating between SMAVG (100) and SMAVG (200) in June14.
SMAVG (100) acts as a support price while, SMAVG (200) acts a ceiling price.
Analysis till 30
th
June14:
We can see that the share prices is going to touch SMAVG (50). Through our analysis we have
shown SMAVG (50) to be the support price. The price of Infosys share is going to decrease till it
touches SMAVG (50). So we recommend selling the Infosys share as on 1
st
July14.

Fibonacci Retracements
Fibonacci retracement were created by taking two extreme points (usually a major peak and trough)
on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%,
61.8% and 100%.
Peak 3797
61.8% 3268
50% 3105
38.2% 2941
23.6% 2739
Trough 2412


Once these levels were identified, horizontal lines were drawn and used to identify possible support
and resistance levels.
Support level:
Infosys stock prices declined by 8.5% on 13
th
March14. We considered support levels after this day.
We identified 38.2% as the support level. The price level is Rs. 2941. The price touched this level
two times after 13
th
March14.
Resistance level:
We applied similar methodology of doing analysis after 13
th
March14. The resistance level identified
is 61.8%. The price level is Rs. 3268.
As on 30
th
June14 the price levels are moving towards support level. Only after reaching the support
level the price trend will change, and the price will start increasing. So the price will continue to fall.
So we should sell the stock on 1
st
July.
Relative Strength Index
We used the average of 14 days to calculate RSI. We used RSI to compares the magnitude of recent
gains to recent losses, in an attempt to determine overbought and oversold conditions of an asset. An
asset is deemed to be overbought once the RSI approaches the 70 level. Likewise, if the RSI approaches
30, it is an indication that the asset may be getting oversold.

The RSI level on 30
th
June14 was 55. This was between 70 and 30. So the Infosys stock was neither
overbought nor oversold. We couldnt determine whether to sell or buy the Infosys stock through RSI.