Weekly Trading Guide

Downside pressure eases for Infosys (₹963.9)

Infosys ended its three weeks of muted movement by surging 3.5 per cent last week. The sharp rise last week has wiped out the possibility of the stock falling below the key ₹900 level. It also confirms that the broader ₹900-₹1,045 range, which has been in place since November 2016 remains intact. Key supports are at ₹950 and ₹938, which can limit the downside in the near-term. A rise to test the next resistance in the ₹978-₹980 zone is possible in the near term. A strong break above ₹980 will then take Infosys higher to ₹990 and ₹1,000. Inability to break above ₹1,000 may trigger an intermediate pull-back move to ₹980 or ₹975. But a strong break above ₹1,000 may boost the momentum and will increase the likelihood of the stock targeting ₹1,020 and ₹1,045 — the upper end of the range thereafter. A strong weekly close above ₹1,045 will be an initial sign of the ₹900-₹1,045 range getting broken. Such a break can take it to ₹1,075. Further rally above ₹1,075 will confirm the trend reversal and clear the way for a test of ₹1,200. Investors can hold the long positions.

ITC hovers above a key support (₹274.3)



ITC fell in the past week as expected to test ₹270. The stock made a low of ₹270.9 and has bounced slightly from there. The broader view continues to remain unclear for the stock. As long as the stock manages to sustain above ₹270 in the coming days, it can rise to ₹280 and ₹285. In such a scenario, a range bound move between ₹270 and ₹285 is possible for some time. A breakout on either side of ₹270 or ₹285 will then decide the next leg of move for the stock. A break below ₹270 can drag the stock lower to ₹265 and ₹263. On the other hand, if ITC manages to surpass ₹285 decisively, it can gain fresh momentum. Such a break can take the stock higher to ₹300 thereafter. As being reiterated in this column over the last few weeks, the region around ₹300 is a crucial long-term trend resistance. So the price action after testing this hurdle will need a close watch as that would be key in deciding the next trend for the stock. A pull-back from ₹300 can take it to ₹290. But a strong rise past ₹300 will increase the possibility of the stock surging to ₹330 or even ₹340 thereafter.

RIL can dip further before a further rally (₹1,350.8)



RIL managed to bounce back and close 1.7 per cent higher last week after having falling sharply over the previous two weeks. However, this bounce back move seems to lack strength. The stock is turning down again after failing to break above the 21-day moving average resistance at ₹1.373. As long as the stock trades below this hurdle, a short-term fall to ₹1,310, ₹1,300 or ₹1,290 cannot be ruled out. An immediate break below ₹1,290 looks less probable. But, a downward break of this level can increase the likelihood of the stock tumbling to ₹1,250 or even lower. However, such a fall may bring in fresh buyers into the markets as that will create an opportunity for those who have missed the bus in the recent sharp rally. Having said that, an upward reversal from the ₹1,310-₹1,290 support zone may ease the downside pressure and take the stock higher to ₹1,350-₹1,375 levels. A strong break and a decisive close above ₹1,375 will wipe out the possibility of any further fall and pave way for a fresh rally to ₹1,410 and ₹1,450. Investors can continue to hold the long positions. Retain the stop-loss at ₹1,215.

SBI consolidates within the uptrend (₹297.1)



SBI is not gaining strength to breach decisively above the psychological ₹300 mark. The stock consolidated sideways between ₹293 and ₹303 last week and has closed on a mixed note. The broader uptrend remains intact. While below ₹300, an intermediate dip to ₹290 cannot be ruled out. But series of key supports in between ₹290 and ₹285 may limit the downside. A break below ₹285, though unlikely at the moment may drag SBI lower to ₹275 or ₹270 in the short-term. Having said that, a strong break and a decisive daily close above ₹300 can boost the momentum. Such a break will increase the likelihood of the stock targeting ₹312 in the short-term. Intermediate resistances above ₹300 are poised at ₹303 and ₹307. Inability to break above ₹312 may trigger an interim corrective fall to ₹300. But a strong break above ₹312 will clear the way for the medium-term targets of ₹327 and ₹330. Investors can hold the long positions. Keep the stop-loss at ₹230 and revise it higher ₹260 as soon as the stock moves up to ₹315. Book partial profits on about 25 per cent of the holdings at ₹325.

Tata Steel hangs around a crucial support (₹436.7)



Tata Steel is managing to sustain above ₹430 and has bounced slightly last week. The 200-day moving average at ₹425 is a crucial support level to watch. The stock is likely to test this support in the coming days. Whether it manages to reverse higher from there or not will be key in deciding the next move for Tata Steel. A decisive close below ₹425 can drag the stock lower to ₹400 and ₹395. The region between ₹400 and ₹395 is a key support which may halt the fall. A subsequent reversal thereafter may have the potential to take the stock higher to ₹450. On the other hand, if the stock manages to sustain above ₹425 and reverses higher in the coming days, a rise to ₹465 is possible. Inability to breach above ₹465 may keep the stock range bound between ₹425 and ₹465 for some time. But a strong break above ₹465 will ease the downside pressure and take the stock further higher to ₹480 and ₹485 thereafter. Investors holding long positions should continue to remain cautious. Exit the long positions at ₹415 if the stock extends its fall breaking below ₹425.





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