Weekly Trading Guide

Immediate outlook is unclear for SBI  (252.6)

The downtrend in SBI that has been in place for more than a month paused last week. The stock was range-bound between ₹247 and ₹262. The immediate outlook is unclear. Traders can stay out of the counter. Immediate support is at ₹248. A break below it will take the stock lower to the next crucial support level of ₹241. SBI will come under renewed pressure if it declines below ₹241decisively. Such a break will increase the likelihood of the stock tumbling towards ₹226 — the 61.8 per cent Fibonacci retracement support or even ₹190 — a key trendline support.

 

 

 

But, if SBI manages to sustain above ₹248, it may get a temporary breather. In such a scenario, a bounce to test the ₹265-₹267 resistance zone is possible in the near term. Inability to breach this resistance zone can trigger a pull-back and keep the stock range-bound between ₹248 and ₹267 for some time. But a strong break above ₹267 will ease the downside pressure. Such a break will take SBI higher to ₹275 or ₹280 on the back of short-covering.

ITC hovers above a crucial support (₹260.6)

ITC began the began the week on a strong note, but failed to sustain the momentum. The stock made a high of ₹271.7 on Tuesday and has come-off sharply from there, giving back all the gains made during the week. A crucial support is at ₹258, which is likely to be tested in the near term. Whether ITC manages to sustain above it or not will decide the next move. If the stock reverses higher from ₹258, it can consolidate in a sideways range for some time. In such a scenario, an up-move to ₹263 or ₹265 is possible. A break above ₹265 will see the up-move extending towards ₹270 and ₹275 thereafter. On the other hand, if ITC declines below ₹258 decisively, it will trigger a fresh fall towards ₹250 in the short term. Further break below ₹250 will increase the downside pressure and drag the stock to ₹244 — the 200-week moving average support. The region between ₹246 and ₹244 is a strong support and further fall below ₹244 is less likely. Long-term investors, on the other hand, can hold their long positions and retain the stop-loss at ₹220.

Resistance caps the upside in Infosys (₹1,172.5)

Infosys seems to lack fresh buyers. Though the stock opened the week on a positive note with a gap-up, it failed to gain momentum and remained in a narrow sideways range all through the week. This indicates the absence of fresh and strong buyers in the market to take Infosys decisively above ₹1,200. Immediate support is at ₹1,169. A fall below it can take the stock lower to ₹1,154. Further break below ₹1,154 will see the downmove extending towards ₹1,136 thereafter. A fall below ₹1,136 is less probable. But if it does, a fall to ₹1,100 is possible. On the other hand, if Infosys manages to sustain above ₹1,169, it can continue to remain in the sideways range for a while. The bullish outlook will remain intact and the possibility of the stock breaching the psychological hurdle at ₹1,200 will remain high. A decisive daily close above ₹1,196 will clear the way for a fresh rally beyond ₹1,200. A strong break above ₹1,200 will trigger a fresh rally, with targets of ₹1,250 or ₹1,280. Investors can hold their long positions.

RIL indicating signs of a fresh fall (₹900.5)

RIL has reversed sharply lower after making a high of ₹935.35 in the past week. A crucial support is in the ₹880-₹870 region, which is likely to be tested in the near term. A bounce from this support zone can take the stock higher towards ₹920 and ₹930 again. But the bias on the chart is slightly bearish. The price action since February, coupled with the sharp 5 per cent fall over the last two weeks, increases the possibility of the stock breaking below ₹870. Such a break can drag the stock lower to ₹860 or ₹850 immediately. If the stock manages to reverse higher from ₹850, a relief rally to ₹870 or ₹880 is possible. But if RIL breaks below ₹850 decisively, it will come under renewed pressure. Such a break will increase the likelihood of the stock tumbling towards ₹790 or ₹785 on the back of profit booking. High-risk appetite traders can go short after the stock breaks below ₹870 decisively. Keep the stop-loss at ₹915 for the target of ₹810. Revise the stop-loss lower to ₹860 as soon as the stock moves down to ₹845.

Tata Steel signals trend reversal (₹605.6)

Tata Steel tumbled over 4 per cent from its intra-week high of ₹632. Technically, the stock has failed to sustain the break above its 200-day moving average. The subsequent pull-back move is giving an initial confirmation of a trend reversal in the stock. The bearish outlook is intact. Next support is at ₹584, which is likely to be tested in the short term. Though an intermediate bounce from this support cannot be ruled out, the upside is expected to be capped as fresh sellers may emerge at higher levels. An eventual break below ₹584 will then increase the likelihood of the stock tumbling towards ₹555 in the medium term. Short-term traders who have taken short positions last week on rallies at ₹630 can hold them. Revise the stop-loss lower to ₹655. Move the stop-loss further lower to ₹605 as soon as Tata Steel moves down to ₹585. The region between ₹630 and ₹650 is a key resistance. Only a decisive break above ₹650 will turn the outlook positive. But such a strong up-move looks unlikely now.

 

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