SBI - Post Sell off Whats Next?

Brief Recap:

SBI - The Largest Public Sector Bank of India came out with it's Q2 results on wednesday. Brief results are as below.

SBI reported net profit of 28.1 billion rupees ($564 million) for its fiscal second quarter ended September 30, compared with 25.01 billion rupees a year earlier. Net interest income rose about 28 percent on the year to 104.2 billion rupees for the three months. The Net profit levels & Net Interest Income was on par with the Private sector giants like ICICI Bank & HDFC Bank.

Post the results the Stock sold off. But Why? It has done quite well on the Net Interest Income & on Net profit front. The main reason for the sell-off being its poor asset quality. The Net non-performing assets at SBI increased to 2.04 percent of Total Assets at the end of September from 1.7 percent a year earlier.

Charts:

State Bank of India - Daily Charts

State Bank of India - Weekly Charts

State Bank of India - Weekly Charts (Fibonacci Retracements)

Observations:

• SBI was downgraded by Moody's on Oct 5th 2011. Last Monday, the Moody's downgraded the Indian Banking sector as a whole from Stable to Negative Outlook.
• Daily Charts - We can see quite a few Bearish Marubozu's (Refer to Introduction to Candlesticks to learn more about the Candlestick Patterns). What is worrying for the Investors is these Marubozu candles are accompanied by high volumes. The volume on the results day was almost 2 years High & whereas the pull back Positive Candles (White Candles) relatively has very less volumes. This indicates that counter is sound  bear grip. 
• Weekly Charts - Stock is in Downtrend as can be observed from the Weekly charts (Making Lower Highs & Lower Lows). 
• Fibonacci retracement levels drawn from the lows of March'09 to highs of Nov'10, indicate the 23.8% levels (support coming around 1501). 38.2% retracement levels are at 1888 (Immediate resistance).
• Indicators: Slow Stochastic is over sold, RSI is approaching oversold levels.

Supports - 1706, 1501. Resistances - 1888, 2020, 2200.

Bottom Line: Stock continues in down trend, if previous lows of 1706 is not held on to then one can initiate a fresh short & stock can move to 1500 levels. Around 1500 it has good support coming in from both Fibonacci levels & also Horizontal supports too.
Any further upmove would get resisted strongly at 2000 & 2200 levels.