Weekly Trading Guide

SBI (₹288.5)

SBI consolidated within its uptrend

SBI was stuck in a narrow range between ₹286 and ₹293 all through last week. The stock has been range-bound between ₹281 and ₹293 for more than two weeks now. The presence of the 100-day, 21-week and a trendline support around ₹281 makes it a strong support. There is hence a lower probability of the stock declining below ₹281, and a higher chance of a break above ₹293 in the coming days. But if the stock breaks below ₹281, a fall to ₹270 or ₹268 cannot be ruled out. Investors should turn cautious if such a fall happens as that would indicate a head and shoulder reversal pattern formation on the chart. Having said that, an eventual break above ₹293 will boost the momentum and take SBI higher to ₹300 and ₹305 initially. Further break above ₹305 will see the rally extending to ₹310 and ₹315. It will also keep the medium-term bullish outlook intact and the stock can test the ₹327-₹330 target range. Investors can hold the long positions with a stop-loss at ₹270. If the stock moves up to ₹325, book some profits and move the stop-loss higher to ₹280 on the rest.

ITC (₹306.2)

Supports to limit downside in ITC

The strong rally in ITC halted last week. The stock fell 4 per cent, a much needed pull-back move after having surged 16 per cent in the previous three weeks. Significant supports are at ₹301 and ₹298 which are likely to be tested in the near term. But a break below ₹298 looks less probable as fresh buying interest may emerge in the ₹298-₹301 support zone. An upward reversal from ₹298-₹301 can take the stock higher to ₹315 and ₹320 once again. A range-bound move between ₹298 and ₹320 is possible for some time in such a scenario. A strong break above ₹320 is needed for ITC to gain fresh strength. Such a break can take the stock higher to ₹335 and ₹340 going forward. Investors can hold the long positions with a stop-loss at ₹290 for the target of ₹330. Revise the stop-loss higher to ₹310 as soon as the stock moves up to ₹325. Short-term traders with high risk appetite can initiate fresh long positions on dips at ₹302 and accumulate longs at ₹299. Keep the stop-loss at ₹192 for the target of ₹320. On the other hand, if ITC declines below ₹298 decisively, it can fall to ₹290.

Infosys (₹948.6)

Immediate outlook is unclear for Infosys

Infosys tumbled breaking below a key support at ₹950 last week. Immediate outlook is not clear. Series of resistances are poised between ₹965 and ₹970. A decisive break above ₹970 is needed for the stock to rise and revisit ₹1,000 levels. Further break above ₹1,000 — which is also the 200-day moving average resistance level — will ease the downside pressure and take Infosys higher to ₹1,020 and ₹1,040 levels thereafter. But as long as the stock stays below ₹970, it can remain under pressure. The possibility of the stock falling to ₹910 or ₹900 cannot be ruled out in the short term. Whether the stock breaks below ₹900 or not will then decide the next leg of move. An upward reversal from ₹900 will keep the broader ₹900-₹1,045 range intact, that has been in place since November 2016. The stock can move higher to ₹950 and ₹1,000 levels once again. But if Infosys breaks below ₹900, it can fall to ₹880 initially. Further break below ₹880 will increase the likelihood of the fall extending to ₹850 thereafter. Investors can hold the long positions.

RIL (₹1,335.5)

A bullish reversal pattern visible in RIL

RIL managed to sustain above the psychological ₹1,300 level last week. The near-term view remains mixed as the stock lacks strength. However, the bias on the chart is positive as we see a possible formation of an inverted head and shoulder bullish reversal pattern on the daily chart. The neck-line resistance of this pattern is at ₹1,364. A decisive daily close above ₹1,364 will confirm this pattern and mark the end of the corrective fall that has been in place since late April. Such a break can take the stock higher to ₹1,440 or ₹1,455 which are the next key resistances. Inability to break above ₹1,440 or ₹1,455 can trigger a pull-back move again to ₹1,400 or ₹1,375. The stock will come under renewed pressure only if it declines below ₹1,300. Such a break can take it lower to ₹1,285 or ₹1,280 in the short term. Series of supports are seen between ₹1,280 and ₹1,250 which can limit the downside . Investors can hold the long positions and retain the stop-loss at ₹1,215. Revise the stop-loss higher to ₹1,245 as soon as the stock moves up to ₹1,380.

Tata Steel (₹506.3)

Bullish outlook is intact in Tata Steel

Tata Steel is finding support around ₹485. The stock made a low of ₹487.5 and bounced back to close the week above ₹500 . Inability to sustain above ₹500 can pull it back to ₹490 and ₹485. Strong support is in the ₹490-₹480 region can limit the downside in the stock. An immediate break below ₹480 looks less probable. On the other hand, if Tata Steel manages to sustain above the psychological ₹500 mark, it can rise to ₹515 and ₹520 in the coming days. Further break above ₹520 will see the upmove extending to ₹530 and ₹535 thereafter. As being reiterated here over the last several weeks, ₹535 is a crucial long-term trend resistance for Tata Steel. Whether the stock breaks above this hurdle or not will decide the next trend. As such, the price action around the ₹530-₹535 region will need a close watch to get a cue on the move going forward. Investors can hold the long positions. Revise the stop-loss higher to ₹435. Book partial profits on some of your holdings at ₹535 and move the stop-loss higher to ₹460 for the rest.

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