Weekly Trading Guide

SBI (266.7)

SBI was range-bound between ₹260 and ₹274 in the past week. The stock oscillated around the 100-day moving average (poised around ₹268) all through the week and closed on a flat note. The candlestick on the weekly chart reflects indecisiveness in the market. Though the immediate outlook is mixed, the bias remains positive. Key supports are at ₹261 and ₹258, which are likely to limit the downside in the short term. Resistance is at ₹273 — the 100-week moving average. A strong break above it can take the stock higher to ₹280 initially. Further break above ₹280 will pave the way for the next target of ₹285. The outlook will turn negative only if SBI declines below ₹258 decisively. In such a scenario, SBI can fall to ₹255 initially. Further break below ₹255 will increase the likelihood of the fall extending to ₹250 or even lower levels thereafter. Short-term traders can wait for dips and go long at ₹262 and accumulate at ₹259. Stop-loss can be placed at ₹249 for the target of ₹283. Revise the stop-loss higher to ₹267 as soon as the share moves up to ₹271.

ITC (₹269.7)

ITC continued to trade under pressure. Though it began the week on a positive note and rose to a high of ₹277.7, it failed to sustain higher. The 55-week moving average resistance at ₹277 has held well. A crucial support is poised in the ₹268-267 region. If ITC manages to sustain above ₹267, a range-bound move between ₹267 and ₹277 is possible. The stock will get a breather only if it breaks above ₹277 decisively. Such a break can take the stock higher to ₹285 and ₹290 levels again. But inability to break above ₹277 can retain the downside pressure. But the price action on the chart indicates that ITC is likely to break below ₹267 in the coming days. This can drag ITC lower to ₹260. Further break below ₹260 will increase the likelihood of the stock extending its downmove to ₹255 or even ₹250 thereafter. The level of ₹250 is a strong medium-term support and an immediate break below it is less probable. Investors can hold their long positions and can accumulate on dips near ₹255. Retain the stop-loss at ₹220.

Infosys (₹1,220.2)

The Infosys stock sustained above ₹1,200 last week, but failed to stage a strong rally. The stock was stuck in a narrow range between ₹1,206 and ₹1,245 and has closed on a mixed note. Key supports at ₹1,208 and in the ₹1,200-1,195 region are likely to limit the downside in the near term. As long as Infosys remains above ₹1,195, the bullish outlook will remain intact. As mentioned last week, a rally to test the previous highs of ₹1,268 is possible in the short term, while the stock remains above ₹1,195. A corrective fall to ₹1,220 after testing the ₹1,268 level cannot be ruled out. However, the downside will be limited as fresh buyers are expected to emerge at lower levels. As such, an eventual break above ₹1,268 will see Infosys touching ₹1,350 and ₹1,370 levels over the medium term. Both medium and long-term investors can hold their long positions. The near-term view will turn negative only if the stock breaks below ₹1,195. Such a break can take Infosys lower to ₹1,180 or ₹1,170 initially. A break below ₹1,170can drag it to ₹1,160 or ₹1,150 thereafter.

RIL (₹929.2)

RIL was stuck in a narrow ₹910-935 range for the second consecutive week. The price action over the last couple of weeks reflects lack of fresh sellers to drag the stock below ₹900. This increases the possibility of a bounce back move in the coming days. Resistance is at ₹935. A break above it can take the stock higher to ₹945 initially. Further break above ₹945 will then increase the likelihood of the up-move extending to ₹960 or ₹970. It will also keep the possibility high for the stock to revisit ₹1,000 levels. Key supports are at ₹900 and then in the ₹890-885 region. The stock will come under pressure only if it breaks below ₹895 decisively. Such a break can then drag RIL to ₹850 or even lower on the back of profit-booking. However, such a strong fall looks unlikely at the moment. Short-term traders with high risk appetite can make use of dips and go long at ₹915 and accumulate at ₹905. Stop-loss can be placed at ₹880 for a target of ₹985. Revise the stop-loss higher to ₹925 as soon as the stock moves up to ₹940.

Tata Steel (₹560.3)

Tata Steel surged to ₹590 last week, but failed to sustain higher. The stock reversed sharply lower from this high, giving back all the gains made and closed 1.2 per cent lower for the week. The 55-day moving average resistance has capped the upside and triggered a pull-back move. The bearish outlook is intact. Immediate support is at ₹550, which is likely to be tested in the near term. If Tata Steel manages to sustain above ₹550, a range-bound move between ₹550 and ₹590 is possible for some time. But a strong break below ₹550 can drag the stock lower to ₹520 or ₹515 in the short term. A fall below ₹550 will increase the downside pressure on the stock. Further fall below ₹515 will increase the likelihood of the stock tumbling towards ₹500 and ₹480 over the medium term. Traders who have taken short positions last week on rallies at ₹575 can hold them. Retain the stop-loss at ₹595 for a target of ₹520. Revise the stop-loss lower to ₹555 as soon as the stock moves down to ₹545.

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