Technical Analysis

Bellwethers: Infosys, RIL, Tata Steel, SBI, ITC

| Updated on January 16, 2018 Published on October 09, 2016

Infosys (₹1,012.65)

Infosys fell 2.4 per cent last week, signalling the resumption of the overall downtrend. A resistance around ₹1,026 is likely to cap the upside in the near term. An intermediate move towards this level may find fresh selling interest . A fall to ₹999 is likely in the near term. Further break below ₹999 will drag it lower to the next support at ₹982. If the stock manages to reverse higher from ₹982, a corrective bounce to ₹1,000 or ₹1,010 is possible. But the upside is expected to be limited as the stock may find selling pressure at higher levels. On the other hand, a fall below ₹982 will increase the likelihood of the downtrend extending to test the 200-week moving average at ₹939 or even the 50 per cent Fibonacci retracement support at ₹913. The pace of fall may slow down inbetween ₹900 and ₹940 as this region has cluster moving average supports. Having said this, a corrective rally is possible from the ₹900-₹940 zone to ₹1,000 and ₹1,020 levels .

RIL (₹1,109.95)

RIL rose 2.5 per cent in the past week. But the stock faces resistance around the ₹1,125 levels. Inability to break above ₹1,125 may pull the stock lower to ₹1,090 or ₹1,080 in the near-term. Further break below ₹1,080 can drag it to ₹1,067. The weekly chart suggests a range- bound move between ₹1,067 and ₹1,130. A breakout on either side of this range will decide the next leg of move. A break below ₹1,067 can take RIL lower to ₹1,050 or ₹1,045. The broader bias is bullish on the charts. So, further fall below ₹1,045 is less likely. Medium-term investors can consider initiating long position on dips near ₹1,045 with a stop-loss at ₹990. The stock will need a strong break and a decisive close above ₹1,125 to gain fresh momentum. Such a break can take it to ₹1,150 initially. Further break above ₹1,150 can target ₹1,190 thereafter. The region between ₹1,190 and ₹1,200 is a crucial resistance. Inability to break above it may trigger a corrective fall to ₹1,150 and ₹1,130 thereafter.

Tata Steel (₹406.4)

Tata Steel surged 8.5 per cent last week. The bullish outlook remains intact for the stock. Further rise is possible if the stock manages to sustain above the psychological ₹400 level. The next key resistances are at ₹420 and ₹431 — the 61.8 per cent Fibonacci retracement level — which are likely to be tested in the near term. A strong break above ₹431 will see the rally extending to ₹490. The level of ₹490 is a strong trendline resistance which is likely to halt the rally at least on its first test. A reversal from there can see a corrective fall to ₹450 or ₹430. Strong support for the stock is in between ₹395 and ₹385. The near-term view will turn negative only if the stock breaks below ₹385 decisively. Such a break can take Tata Steel lower to ₹375 or ₹360. Short-term investors can move the stop-loss higher to ₹380 from ₹340 and book profit at ₹430. Medium-term investors can continue to hold the longs and retain the stop-loss at the level of ₹310.

SBI (₹258.25)

SBI surged to a high of ₹264.6 but gave up some of the gains. However, it closed 3 per cent higher for the week. The 21-day moving average at ₹256 is the immediate support. A break below it may take the stock lower to ₹250 or ₹246, which may limit the downside in the short term. A reversal from ₹246 can take SBI higher to ₹255 and ₹260 once again. But if the stock breaks below ₹246, the fall can extend to ₹235 or even ₹230. However, ₹230 is a strong support which can halt the down move. So a fall to ₹235 or ₹230 will be a good opportunity to buy the stock. Key resistance is at ₹265. A strong break above it can boost the bullish momentum and take the stock to ₹270 initially. It will keep the broader uptrend intact and mark the start of a fresh leg of upmove. Further break above ₹270 will see the stock targeting ₹290 and ₹300 . Medium-term investors can hold the long positions and retain the stop-loss at ₹210. Accumulate longs on dips near ₹235.

ITC (₹239.15)

ITC extended its fall for the third consecutive week. The stock has tumbled 8 per cent over the last three weeks. The stock can fall further to ₹235 — which is a key trendline and to ₹233 — the 38.2 per cent Fibonacci retracement support levels. A reversal from any of these supports will give a breather to the stock. Such a reversal can take the stock higher to ₹245 or ₹248. But if the stock breaks below ₹233, the fall can extend to test the 200-day moving average support at ₹229 or the 100-week moving average at ₹228. The presence of these two moving averages makes the ₹229-₹228 region a strong support. Also, since the stock has been falling continuously for three weeks now, this support zone is more likely to halt the down-move if ITC declines below ₹233 this week. A reversal from ₹229 or ₹228 may take the stock higher to ₹235 or ₹237. Further break above ₹237 will ease the downside pressure and take it to ₹240 or ₹245 thereafter.





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