Weekly trading guide

SBI (₹289.4)

The stock of SBI bounced, gaining 2.6 per cent last week. The price action on the daily chart suggests that the corrective fall that has been in place all through April might be coming to an end. A strong break above the ₹295-₹297 resistance region will confirm this. Such a break can take the stock higher to ₹302 or ₹306 in the short term. Inability to break above ₹306 may trigger an intermediate pull-back to ₹300 or ₹297. But a strong break above ₹306 will pave way for the medium-term target levels of ₹327 and ₹330. The region between ₹327 and ₹330 is a crucial long-term resistance and what happens after testing this hurdle will decide the next move. Investors can hold the long positions with a stop-loss at ₹230. Revise the stop-loss higher to ₹260 as soon as the stock rises to ₹315. Partial profits of around 25 per cent of the holdings can be booked at ₹325. The stock has been forming a strong base around ₹280 for more than a week now. So only a strong break below ₹280, which is less likely, will bring renewed pressure and pull the stock down to ₹276 or lower in the short term.

ITC (₹278.6)

ITC was volatile and formed a spinning top candlestick pattern in the past week, indicates indecisiveness. It surged to a high of ₹292.85, but reversed sharply lower in the last two trading days and gave back most of the gains made during the week. Immediate support is at ₹276 which can be tested this week. The downside pressure will ease if the stock manages to bounce from there. In such a scenario, a test of ₹285 is possible. Inability to break above ₹285 can keep it in a tight range between ₹276 and ₹285 for some time. A breakout on either side of ₹276 or ₹285 will then decide the next leg of move. But a strong break and a decisive close above ₹285 will increase the likelihood of the stock rallying to ₹295 or ₹300 thereafter. On the other hand, if ITC fails to reverse higher from ₹276 and breaks below it this week, it can fall to ₹272 or ₹270. The level of ₹270 is a key short-term support. A decisive fall below this support will increase the selling pressure on the stock. Such a fall may drag ITC lower to ₹263 or ₹261 — the 21-week moving average support.

Infosys (₹919.4)

Infosys is stuck in between ₹910 and ₹935 for the second consecutive week. The price action in the past two weeks suggests that the stock will need some new triggers to bring in fresh and strong sellers in the market to drag it below the crucial support level of ₹900. At the moment, the ₹900-₹1,045 sideways range that has been in place since November 2016 is intact. So, as long as the stock sustains above ₹900, the possibility is high of the stock breaking above ₹935. Such a break will ease the downside pressure and take Infosys higher to ₹950 initially. Further break above ₹950 will pave way for the next interim target of ₹985 before the stock heads eventually towards ₹1,045 — the upper end of the range. On the other hand, if Infosys falls below ₹900, it can test ₹880 initially. Further break below ₹880 can drag it to ₹815 or ₹800. As being reiterated here, the ₹815-800 zone is a strong long-term support and a break below it is unlikely. Investors can hold the long positions and accumulate at ₹910 and at ₹850 if the stock breaks and falls below ₹900.

RIL (₹1,394.8)

RIL broke above its resistance at ₹1,430 last week but failed to sustain higher. The stock fell back sharply after recording a high of ₹1,465. The 21-day moving average support is at ₹1,377 and is likely to be tested this week. Inability to reverse higher from there can drag the stock lower to ₹1,350 or ₹1,345. Further fall below ₹1,345 though looks less probable can pull RIL down to ₹1,300 or ₹1,290. An upward reversal from ₹1,350 or ₹1,345 can take the stock higher to ₹1,400 and ₹1,430 once again. The weekly chart suggests that a range-bound move between ₹1,345 and ₹1,430 is possible for some time before the stock begins its next leg of move. The bias continues to remain bullish which leaves the possibility high of the stock breaking above ₹1,430. Such a break can take the stock to ₹1,450 initially. Further break above ₹1,450 will increase the likelihood of the stock surging to ₹1,550 and ₹1,600 thereafter. Investors can hold the long positions with a stop-loss at ₹1,215. Revise the stop-loss higher to ₹1,320 as soon as the stock moves up to ₹1,550.

Tata Steel (₹448.8)

Tata Steel was range-bound between ₹444 and ₹463 last week. Though there is no immediate threat for a fresh fall as long as the stock stays above ₹440, but it has to breach above ₹465 for the downside pressure to ease. A break above ₹465 can take the stock higher to ₹480. Only a decisive breach above ₹480 will wipe out downside pressure. The stock may continue to remain range-bound between ₹440 and ₹460 in the near term and a much wider range between ₹440 and ₹480 in the short term. A breakout on either side of ₹440 or ₹480 will decide the next move. As mentioned last week the region between ₹440 and ₹435 is crucial support and a break below it is less likely. As such, an eventual break above ₹480 after a short-term consolidation can take the stock higher to ₹500 levels once again. But if Tata Steel declines below ₹435, there is a danger of it falling to ₹420 or ₹400s. Investors holding long positions should tread with caution. Retain the stop-loss at ₹415 and revise it higher to ₹460 if the stock rallies to ₹520.

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