Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on May 07, 2018 Published on May 06, 2018

SBI (241.9)

The resistance at ₹251 is holding well for SBI. The stock made a high of ₹249.5 on Monday and has come off from there. As long as SBI remains below ₹251, a dip to ₹232 or ₹230 is possible. A bounce from the ₹232-₹230 support zone can keep the stock in a sideways range between ₹230 and ₹251 in the short term. A breakout on either side of ₹230 or ₹251 will decide the next move. A strong break below ₹230 will bring renewed pressure to the stock. It will increase the likelihood of the stock tumbling towards ₹200 or ₹190 over the medium term. On the other hand, if SBI sustains above ₹230 in the coming days and breaches ₹251 decisively, the downside pressure will ease. In that case, the stock can move up to ₹260 and ₹265 levels in the short term. Traders can hold the short positions. Retain the stop-loss at ₹252 for the target of ₹234. Revise the stop-loss lower to 240 as soon as the stock dips to ₹238. Move the stop-loss further lower to ₹238 if SBI tests ₹236.

ITC (₹277.5)

ITC rallied as expected to test the ₹285-₹290 resistance cluster last week. The stock made a high of ₹289.55, but reversed sharply lower from those levels, giving back all the gains made during the week. Immediate support is at ₹276. A break below it can take the stock lower to ₹272 or ₹270. Several supports in the broad ₹272-₹268 region is likely to limit the downside. A break below ₹268 is unlikely as fresh buying interest is expected to emerge in the market at lower levels. An eventual bounce from this ₹272-₹268 support zone can take ITC higher to ₹278 initially. Further break above ₹278 will see the up-move extending to ₹285 or ₹290 again. Investors can hold the long positions and retain the stop-loss at ₹220. Short-term traders with a high-risk appetite can go long on dips at ₹273 and accumulate at ₹271 and ₹269. Stop-loss can be placed at ₹267 for the target of ₹285. Revise the stop-loss higher to ₹275 as soon as the stock moves up to ₹278. Move the stop-loss further higher to ₹278 as soon the stock tests ₹281.

Infosys (₹1,172.9)

Infosys failed to breach the psychological ₹1,200 level for the second consecutive week. The stock made a high of ₹1,207.9, but fell sharply to a low ₹1,156.8 before closing the week 1 per cent lower at ₹1,172.9. The broader ₹1,100-₹1,200 sideways range is intact. The stock has been trading in this range since February. Immediate support is in the ₹1,155-₹1,150 region. A fall below it can drag the stock lower to ₹1,120. Further break below ₹1,120 can take the stock to ₹1,100 . The stock is likely to sustain above ₹1,100 as fresh buyers can emerge at lower levels . But in case Infosys declines below ₹1,100, it can target ₹1,050 or ₹1,030. On the other hand, the stock will gain fresh momentum only if it records a decisive close above ₹1,200. In such a scenario, the stock can gain momentum and rally to test the previous high of ₹1,278. It will also keep the overall uptrend intact, which has the potential to target ₹1,350 or even ₹1,400 over the medium term. Both medium and long-term investors can hold the long positions.

RIL (₹953.9)

RIL failed to sustain its momentum last week after surging over 7 per cent the week earlier. The stock traded under pressure all through the week and tumbled 4 per cent last week. Immediate resistance is at ₹960. As long as RIL remains below this hurdle, it can dip to test the next support at ₹944. A break below ₹944 can drag the stock lower to ₹925. A bounce from ₹925 can take RIL higher to ₹1,000 levels again. A strong break above ₹1,000 will see the up-move extending toward ₹1,025 — a key resistance level. A strong break above ₹1,025 will boost the momentum. Such a break will then increase the likelihood of the stock targeting ₹1,050 or even ₹1,100 over the medium term. On the other hand, if RIL breaks below ₹925 in the coming days, it can fall further to ₹910 or even ₹890 over the short term. The level of ₹888 — the 200-day moving average — is a crucial support for the stock. The price action around this support will need a close watch to get a cue on the next move.

Tata Steel (₹581.3)

Tata Steel seems to be lacking strength to breach the psychological level of ₹600 decisively. The stock made a high of ₹599.6 and reversed lower thereafter to close the week down 1 per cent. As long as the stock remains below ₹600, the near-term view will remain negative. A fall to ₹550 looks likely. The level of ₹550 is a crucial long-term trend support. If the stock manages to bounce from this support, a range-bound move between ₹550 and ₹600 can be seen for some time. But if Tata Steel breaks below ₹550, it can come under renewed pressure. Such a break will increase the likelihood of the stock tumbling towards ₹500 or even ₹480 over the medium term. Traders can go short on rallies at ₹590 and ₹596. Stop-loss can be placed at ₹615 for the target of ₹555. Revise the stop-loss lower to ₹580 as soon as the stock moves down to ₹568. The stock will get a breather only if it breaks above ₹600 decisively. Such a break will trigger a corrective rally to ₹620 or ₹630 on the back of short covering.

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