Day trading guide

Weekly Trading Guide

Gurumurthy K | Updated on January 08, 2018 Published on October 01, 2017

Crucial support ahead for SBI (₹253.7)

SBI tumbled over 3 per cent and extended its fall for the second consecutive week. The bearish outlook remains intact. However, a crucial support is up in the ₹246-₹244 zone, which is likely to be tested. Whether SBI reverses higher from there or not will determine the next move. A bounce from the ₹246-₹244 support zone can trigger a relief rally to ₹260 or ₹265. High risk appetite short-term traders can go long if the stock reverses higher from the ₹246-₹244 support zone. Stop-loss can be placed at ₹236 for the target of ₹260. Revise the stop-loss higher to ₹250 as soon as the stock moves up to ₹255. On the other hand, if the stock fails to bounce from ₹244 in the coming days and extends the fall, breaking below this crucial support, the selling pressure may increase. In such a scenario, the current downtrend can extend to ₹237 or ₹232 thereafter. The price action around ₹232 will need a close watch as further fall below ₹232 will increase the likelihood of the stock tumbling to ₹200 or ₹190 over the long-term.

ITC may reverse after testing key support (₹258.25)

ITC fell 3.7 per cent and was down for the fourth consecutive week. The key 21-month moving average support is at ₹254, which is likely to halt the current fall. The possibility of an upward reversal from this support cannot be ruled out. In such a scenario, a relief rally to ₹263 or ₹265 is possible in the near term. Further break above ₹265 will see the upmove extending to ₹270. The upside is expected to be capped at ₹270 at the moment. On the other hand, if ITC fails to reverse higher from ₹254 and breaks below it, the current downtrend can extend further. The next key support level of ₹250 can be tested in that case. The presence of the 100-week moving average and a trendline around ₹250 makes this level a strong support. As such, further fall below ₹250 is less probable. Medium-term traders who initiated long position last week at ₹262 and ₹258 can hold it. Accumulate longs at ₹254 and ₹251. Retain the stop-loss at ₹248 for the target of ₹280. Revise the stop-loss higher to ₹262 as soon as the stock moves up to ₹265.

Immediate outlook is unclear for Infosys (₹898.75)

Infosys was stuck in a narrow range between ₹890 and ₹908 in the past week and has closed on a flat note. The immediate outlook is not clear. A key support is at ₹888. If Infosys manages to sustain above this support, a rise to ₹911 is possible. A break above ₹911 can take the stock further higher to ₹918 — a crucial medium-term support level. Inability to break above this support can drag the stock lower to ₹900 or ₹888 again. In such a scenario, a range-bound move between ₹888 and ₹918 can be seen for sometime. On the other hand, if Infosys fails to bounce from the current levels and breaks below ₹888 decisively, it can come under renewed pressure. Such a break can drag the stock lower to ₹865 or ₹860. Further break below ₹860 will see the downmove extending to ₹840 or ₹830. A being reiterated in this column, the region between ₹840 and ₹830 is a key long-term support which can halt the current downtrend. Further fall below ₹830 is unlikely. Investors can hold the long positions. Accumulate on dips near ₹860 and ₹840.

RIL is likely to fall further (₹782.15)

RIL fell sharply breaking below ₹800 last week and has closed 4.3 per cent lower. The stock has tumbled 7.3 per cent over the last two weeks. The level of ₹800 will now serve as a strong resistance and can cap the upside in the near term. A fall to test the key short-term support level of ₹770 is likely. If the stock manages to bounce back from ₹770, the downside pressure may ease. A bounce back move to ₹800 or ₹820 is possible in such a scenario. But if RIL declines, breaking below ₹770, the fall can extend further to ₹750 or ₹735. The 21-week moving average at ₹750 and a long-term trendline at ₹735 makes these levels strong supports for the stock. If the stock sustain above these supports, fresh buying interest may emerge. A strong upward reversal thereafter can take the stock higher to ₹775 and ₹800 initially. Further break above ₹800 can see a revisit to to ₹850 and ₹870 levels. Investors with a long-term perspective can make use of declines to buy the stock in the ₹750-735 region.

Resistance to cap the upside in Tata Steel (₹651)

Tata Steel tumbled 4.8 per cent initially last week to a low of ₹623. But the stock has managed to bounce back from this low and recover most of the loss made during the week. But this bounce-back move lacks strength. The 21-day moving average at ₹662 is a key resistance which may cap the upside in the near term. If the stock manages to surpass this hurdle, the downside pressure will ease. A rise to ₹670 or even ₹685 is possible then. But as long as the stock trades below this hurdle, it will continue to remain under pressure and a fall to ₹620 or ₹615 cannot be ruled out. If the stock manages to reverse higher from the ₹620-₹615 support zone, a relief rally to ₹650 is possible. But if Tata Steel declines below ₹615 decisively, the possibility of it tumbling to ₹580 on the back profit-booking will increase. Traders can make use of rallies to go short at ₹658. Stop-loss can be placed at ₹673 for the target of ₹620. Revise the stop-loss lower to ₹650 as soon as the stock moves down to 635.

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