Weekly Trading Guide

SBI (₹308.1)

SBI surged breaking above the psychological ₹300 mark last week. The uptrend is intact. Support in the ₹302-₹300 region can limit the downside in the near-term. Immediate resistance is in between ₹312 and ₹314, but is vulnerable. A strong break and a daily close above ₹314 will pave way for the next targets of ₹327 and ₹330. This region between ₹327 and ₹330 is a crucial long-term resistance. Whether SBI breaks above it or not will decide the next trend. Since the stock has been on a continuous rally since March 2016, there is a strong likelihood of a corrective fall from the ₹327-₹330 region. Such a pull-back move may drag the stock lower to ₹300 levels. Investors can hold the long positions with a revised stop-loss at ₹270. Book partial profits on around 25 per cent of your holding at ₹325 and then move the stop-loss higher to ₹280 on the rest. On the other hand, if SBI breaches above ₹330, it can rise to ₹335 initially. Further break above ₹335 will open the doors for the next target of ₹350.

ITC (₹285.9)

ITC spiked to an intra-week high of ₹295.5 but fell back in the final session to close 4.2 per cent higher for the week. Immediate support is at ₹283. Daily chart suggests that a rise to test the resistance at ₹296 is possible in the coming days. Inability to break above ₹296 may trigger a pull back move to ₹290 or even ₹280. On the other hand, if ITC breaks above ₹296, it can test ₹300 — a key long-term trend resistance. The price action after testing ₹300 will be crucial in deciding the next trend. A downward reversal from ₹300 can take the stock lower to ₹290 or ₹280 once again. But if ITC manages to rise past ₹300 decisively, it can boost the momentum. Such a break can take the stock higher to ₹330 and ₹335 levels thereafter. The bias is bullish on the chart and the stock is likely to break above ₹300 eventually, if not immediately. High risk appetite investors with a medium-term perspective can go long at current levels. Stop-loss can be placed at ₹255 for the target of ₹330. Accumulate longs on dips at ₹275.

Infosys (₹957.9)

Infosys was range-bound between ₹944 and ₹974 last week. The immediate outlook is not clear. The stock may continue to consolidatefor some more time. But the overall bias is positive. Strong support is in the ₹940-₹938 region, which is likely to limit the downside. The outlookwill turn negative only if the stock declines below ₹938. Such a break can take Infosys lower to ₹925 and ₹910. But the fall looks less probable. Resistance is in the ₹977-₹979 region which can be tested in the near term. A strong break and a decisive daily close above ₹979 is required for the stock to gain fresh momentum. Such a break can take the stock higher to ₹992 and ₹996 — the 200- week and 200-day moving average resistances respectively. Further break above ₹996 will increase the possibility of the stock rallying to ₹1,020 and ₹1,045 — the upper end of the broader ₹900-₹1,045 sideways range which has been in place since November 2016. Investors can hold the long positions.

RIL (₹1,318.5)

RIL fell further as expected last week and continues to remain under pressure. A fall to test the supports at ₹1,300 and ₹1,293 is likely in the near term. The downside pressure can ease if the stock manages to bounce strongly from either of these supports. In such a scenario, a rally to ₹1,350 and ₹1,375 is possible. The stock will need a strong break above ₹1,375 to gain fresh momentum and revisit ₹1,400 and ₹1,450 levels. But, if RIL declines below ₹1,293, the downside pressure may gain momentum and the corrective fall that has been in place since the last week of April may then extend to ₹1,275 or ₹1,255. A strong break below ₹1,255 can drag RIL lower to ₹1,220. Further fall below ₹1,220 is unlikely. From a sentiment point of view, the players who have missed the recent sharp rally may want to enter the stock at lower levels. This factor is more likely to bring in fresh buying interest into the ₹1,250-₹1,220 region. Investors can continue to hold the long positions. Retain the stop-loss at ₹1,215.

Tata Steel (₹489.4)

Tata Steel sky-rocketed 12 per cent last week. Technically, the trendline support around ₹425 has held very well and has now wiped out the threat of the stocking falling to ₹400. It also keeps the uptrend that has been in place since February 2016 intact. As long as the stock trades above the ₹477-₹475 support zone, an up-move breaking above ₹500 to ₹505 or ₹510 is likely in the short term. Inability to break above ₹510 may trigger a pull back move to ₹480 or ₹470 thereafter. On the other hand, if Tata Steel manages to breach above ₹510 decisively, it can surge to ₹535. The level of ₹535 is a key long-term resistance and what happens after testing this hurdle will decide the move thereafter. Investors can hold the long positions with a stop-loss at ₹415. Revise the stop-loss higher to ₹460 if the stock rallies to ₹520. Book partial profits on 20 per cent of your holding at ₹535. The near-term view will turn negative for a fall to ₹465 or ₹460 only if the stock declines below ₹475.

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