Weekly Trading Guide: RIL, SBI, ITC, Infosys, Tata Steel

Near-term outlook is mixed for SBI (₹337.4)

SBI was volatile for the second consecutive week. It fell initially to a low of ₹322 and reversed sharply to make a high of ₹346.5. It finally closed the week 1.3 per cent higher . Last week’s candle reflects indecisiveness in the market. Whether the stock breaks above ₹344 or below ₹336 will determine the next move. The key resistance at ₹344 is restricting the stock from extending its upmove strongly. A strong break and a decisive daily close above ₹344 is needed for SBI to gain fresh momentum. In such a scenario, the possibility of the stock rallying to ₹366 will increase. But as long as the stock trades below ₹344, there is a strong likelihood of it breaking below immediate support at ₹336. Such a break can take the stock lower to ₹320 initially. Further break below ₹320 can target ₹310 or ₹305 . Traders who have taken long positions on dips last week at ₹325 can hold it with the revised stop-loss at ₹335 for the target of ₹365. Move the stop-loss higher to ₹340 as soon as the stock rallies to ₹348.

Relief rally likely in ITC in the near term (₹257.5)

ITC extended its fall for the third consecutive week. The stock was down 1.5 per cent last week. It tested the crucial support level of ₹250 and has managed to bounce higher from there. Immediate support is at ₹256. The price action in the coming days will need a close watch for a cue on the next trend. If ITC manages to sustain above this support, a relief rally to test the 21-day moving average resistance at ₹264 is possible. A strong break above ₹264 will ease the downside pressure and increase the possibility of the upmove extending to ₹270. But the inability to break above ₹264 and a subsequent pull-back move can drag ITC lower to ₹256 or ₹253 again. The 100-day moving average around ₹253 is a key short-term support. A strong break and a decisive close below this support can take the stock further lower to ₹248. The level of ₹248 — a key long-term trendline support — may limit the downside in the stock. It will come under more pressure if it breaks below ₹248 decisively.

Supports to limit the downside in Infosys (₹970.9)

Infosys gained 3.6 per cent intra-week to touch a high of ₹995.45. But it fell on the final trading day, giving back most of the gains made and closed 1 per cent higher for the week. The broader bias remains bullish. Immediate support is at ₹960 and resistance is at ₹980. A break on either side of ₹960 or ₹980 will determine the next move. A break below ₹960 can take the stock lower to ₹950 or ₹945. The level of ₹945 is a key trendline support that is likely to limit the downside in the short term. Further fall below this level is less probable. This leaves the possibility of the stock breaking above ₹980 high. Such a break can take Infosys higher to ₹1,010 initially. Further break above ₹1,010 will then pave way for the next targets of ₹1,020 and ₹1,030. Investors can hold the long positions. The near-term view will turn negative only if the stock declines below ₹945. However, cluster of supports below ₹945 may restrict the pace of fall and limit the downside to ₹930 or ₹920 over the short term.

Resistances may cap upside in RIL (₹909.7)

RIL managed to recover in the past week after tumbling over 6 per cent in the week earlier. The stock was up about 3 per cent last week. Immediate support is inbetween ₹905 and ₹900. As long as the stock sustains above this support zone, a rise to test the ₹925-₹930 resistance region is possible in the near term. Inability to break above ₹930 can pull the stock lower and keep it range-bound between ₹900 and ₹930 for some time. If the stock continues to trade below ₹930, it can break and fall below ₹900, targeting ₹875 or even ₹860. A strong break below ₹860 will then increase the likelihood of the stock tumbling to ₹830 levels. On the other hand, if RIL manages to breach ₹930, it can test ₹955 and ₹960. Traders who have taken short positions can hold it with the stop-loss at ₹935, for the revised target of ₹830. Revise the stop-loss lower to ₹915 as soon as the stock moves down to ₹885 and further lower to ₹870 as soon as RIL tests ₹860.

Positive short-term view for Tata Steel (₹701.3)

Tata Steel has been hovering around ₹700 over the last couple of weeks. Though the stock fell over 4 per cent intra-week , it managed to reverse higher, recovering all the loss and close on a flat note for the week. The price action on the chart suggests that Tata Steel is not getting strong selling interest to drag it decisively below ₹700. Near-term support is at ₹695. If the stock manages to sustain above this support a rally to ₹728-₹730 or even ₹745 is possible . The region around ₹745 is a key long-term resistance which will need a close watch. On the other hand, if Tata Steel declines below ₹695, it can fall to ₹685 initially. Further break below ₹685 can drag the stock lower to ₹665. The level of ₹665 is a key short-term support which is likely to limit the downside in the stock. A strong bounce from this support can take the stock higher to ₹700 and ₹730 levels again. Investors hold the long positions and retain the stop-loss at ₹630. Accumulate longs on dips at ₹665.

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