STATE BANK OF INDIA (BEST ENTRY PRICE)

We all are agreed to the fact that SBI is a must-have in one's long term Portfolio. However the determination of the best entry price at this stage is important so as to maximize gains and avoid heart burn.

Analysing on the basis of TECHNICALS we find  that on the 5-year Price Charts, all sustained downturns in the recent past have seen a 23-25% retracement form the earlier peaks. eg in the period 3/11/2010 to 13/1/2011 the Price saw a 23% retracement from peak of 3272 to 2560 on a closing basis. Similarly, the period 21/4/2011 to 20/6/2011 saw a 24% retracement from 2860 to 2179 on closing basis. The recent price peak on 20/7/2011 was at 2472. Thus a 23% retracement would imply a price of about 1900 and a 25% retracement would mean a price of about 1855 on a closing basis. The recent closing low in this last mentioned leg was at 1888 on 26/8/2011 from where it rebounded strongly.

On the basis of the above simplistic Technicals I would stick my neck out and say that SBI has more or less bottomed out at 1888 on a closing basis on 26/8/11. Rock solid support is at 1855. In my considered opinion long term investors can make entry in the 1855-1950 range for the long term.