Technical Analysis

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

GURUMURTHY K | Updated on January 13, 2018 Published on February 19, 2017

SBI (₹268.8)

SBI fell 2.7 per cent last week. The near-term outlook is weak as the stock is not gaining strength. Immediate support is at ₹264 which is likely to be tested this week. A break below ₹264 may drag the stock lower to ₹260 or ₹259. At the moment, the downside is expected to be limited to ₹259. A bounce-back from ₹264 or ₹259 can take SBI higher to ₹280 and ₹283 once again. The region between ₹288 and ₹290 is a key resistance . A strong break above ₹290 is needed to see a fresh rally. Such a break can take SBI higher to ₹300 initially. Further break above ₹300 may target ₹327 over the medium term. Investors can hold the long positions. Retain the stop-loss at ₹220. Move the stop-loss higher to ₹230 as soon as the stock rises to ₹295. On the other hand, if SBI may come under pressure if it fails to reverse higher from its supports at ₹264 or ₹259. A strong break below ₹259 will increase the possibility of the fall extending to ₹250 or even ₹245.



Infosys (₹999.7)

Infosys surged 5 per cent to reach an intraweek high of ₹1,014.8. But the stock gave up some of its gains from the high on Friday to close just below the psychological ₹1,000 mark. The rise in the stock for the second consecutive week is strengthening the case of a double bottom on the chart, which we had indicated in this column last week. Indicators on the charts are positive. The stock has closed well above its 100-day moving average and the 21-day moving average is signalling a turnaround. Support is in the ₹980-970 zone. A rise to test the key resistance at ₹1,045 looks likely in the coming days. A strong break above this hurdle will give an initial sign of trend reversal. Such a break can take Infosys higher to ₹1,080 initially. Further break above ₹1,080 may see the rally extending to ₹1,089 or ₹1,100 thereafter. Inability to break above ₹1,045 may trigger a pull-back move. In such a scenario, a range-bound move between ₹900 and ₹1,045 can be seen for some time.

ITC (₹268.2)

ITC fell 1.7 per cent last week. The stock tested the support at ₹264 on Friday and has bounced back from there. Whether it manages to sustain above this support or not will decide the trend for this week. A trendline as well as the 38.2 per cent Fibonacci retracement support is poised around ₹274. So there is high possibility for the stock to stay above ₹264 and rise to ₹280 in the near term. Inability to break above ₹280 can keep the stock range-bound between ₹264 and ₹280 . But if the stock breaches above ₹280 decisively, the up-move can extend to ₹290 . Further break above ₹290 will pave way for the next crucial target of ₹300. As mentioned over the last couple of weeks, the region around ₹300 is a crucial long-term trend resistance. Whether the stock breaks above ₹300 or not will be key in deciding its the next move. On the other hand, if ITC declines below the immediate support at ₹264, it can fall to ₹260 . Further break below ₹260 can drag it to ₹257 or ₹255.





RIL (₹1075.3)

As expected, RIL breached above its resistance at ₹1,050 in the past week. The stock surged over 4 per cent to close on a strong note. The price action last week reflects strength in the stock. This keeps the possibility of seeing any sharp reversal in the near-term, low. Immediate support is at ₹1,065, which can limit the downside in the near term. Immediate resistance is at ₹1,085 which is likely to be tested this week. A strong break above it can take the stock higher to ₹1,095 . Inability to break above ₹1,095 may trigger a pull-back move to ₹1,070 or even ₹1,060. But if the stock manages to surpass ₹1,095 decisively, the up-move can extend to ₹1,125 or ₹1,130. Medium-term investors can hold their long positions with a stop-loss at ₹1,010. Revise the stop-loss higher to ₹1,035 as soon as the stock moves up to ₹1,110. The stock will come under pressure only if it declines below ₹1,050 . Such a break, though less probable can drag RIL to ₹1,030 or ₹1,020.



Tata Steel (₹467.9)

The stock has been stuck in the ₹455-₹480 range for the third consecutive week. A breakout on either side of this range will decide the next leg of move. The broader bullish outlook remains intact. As long as the stock sustains above ₹455, a strong breakout above ₹480 is possible . Such a break will boost the bullish momentum and take the stock higher to ₹500 initially. Further break above ₹500 will see the rally extending to ₹540 and ₹550. On the other hand, if Tata Steel declines decisively below ₹455, a fall to ₹447 is possible. Further break below ₹447 can drag it to ₹440 or ₹435 thereafter. The downside is expected to be limited to ₹435 in the short term. As such, a break below ₹435 looks less probable at the moment. Medium-term investors can hold the long positions with a stop-loss at ₹390. Investors with a lower risk appetite can book partial profits (around 30 per cent of your holdings) at ₹445 if the stock falls breaking below ₹447.



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