Weekly Trading Guide

Supports could limit the downside in SBI(₹277.5)

SBI rallied as expected last week to test the key resistance level of ₹285. The stock surged over 6 per cent during intra-week to mark a high of ₹289.3. But SBI fell from this high, giving back most of the gains and closed 1.8 per cent higher for the week. The near-term view is negative. The stock can test the immediate support at ₹273. A break below this support can pull the stock lower to ₹270. Further break below ₹270 will increase the likelihood of the stock declining to ₹265 or even ₹262 in the short term. On the other hand, if SBI manages to reverse higher from ₹273 or ₹270, the downside pressure would ease. In such a scenario, the stock can rally to revisit ₹285 levels. A strong break and a decisive weekly close above ₹285 will confirm the end of the downtrend that has been in place since last November. It will then pave way for SBI to target ₹310 and ₹320 levels. Indicators on the charts signal that the downside could be limited in SBI.

Bearish outlook is intact in ITC (₹264.5)

ITC was down for the fifth consecutive week. The stock surged to a high of ₹274 in the initial part of the week, but failed to sustain higher. It reversed sharply lower from its high, giving back all the gains made during the week. The fall has dragged the stock decisively below the 200-day moving average, which has been providing strong support over the last couple of weeks. ITC looks vulnerable to break below the immediate support at ₹263.5 and may fall to ₹260 or ₹258 in the coming days. The price action on the chart keeps the bearish outlook intact. The fall over the last five weeks indicates that the broader ₹250-₹290 sideways range is intact. ITC has been stuck in this sideways range for a prolonged period of time since last August. A fall to test ₹250 is possible in the coming weeks. However, such a fall is a good buying opportunity for long-term investors as a break below ₹250 is unlikely. Investors can hold the long positions and accumulate on dips at ₹255 and ₹252. Retain the stop-loss at ₹220.

Key resistance is ahead for Infosys (₹1,280.4)

Infosys surged to record highs in the past week, as expected. The stock recorded a high of ₹1,290 and has come-off slightly to close 1.6 per cent higher for the week. A key resistance is in the ₹1,295-₹1,300 region, which is likely to be tested in the near term. But whether Infosys breaks above this hurdle or not will decide the next move. Inability to breach ₹1,300 can trigger a short-term corrective fall. A pull-back from ₹1,300 can drag the stock lower to ₹1,250 or ₹1,230 on the back of profit-booking. However, the downside in the stock is expected to be limited as fresh buying interest is likely to emerge at lower levels. Strong support is at around ₹1,200. The outlook will turn negative only if the stock breaks below this support. But this looks unlikely. As such, an eventual break above ₹1,300 will boost the momentum. This can take the stock up to ₹1,370. From a long-term perspective, Infosys is likely to target ₹1,450. Both medium and long-term investors can hold their long positions.

RIL hovers below a crucial resistance (₹1,013.8)

RIL surged over 3 per cent last week. The stock has been rallying consistently over the last three weeks and is up about 10 per cent. A key short-term resistance is at ₹1,023. If RIL manages to breach this hurdle, the current rally can extend to ₹1,040 or ₹1,045 in the near term. Further break above ₹1,045 will pave way for the next target of ₹1,100 and higher levels. But inability to breach the immediate resistance level of ₹1,023 will increase the likelihood of a corrective fall in the coming days. A pull-back from ₹1,023 will drag the stock lower to ₹990. Further break below ₹990 will drag RIL lower to ₹965 or even ₹950 in the short term. Such a fall will keep the ₹870-₹1,020 sideways range intact. But indicators on the charts are bullish. The 21-day moving average is turning around after just testing the 55-day moving average. This is a positive signal, indicating that the downside could be limited. As such the possibility is high of the stock breaking above ₹1,023 and rallying to ₹1,045.

Immediate outlook is mixed for Tata Steel(₹565.9)

Tata Steel tumbled 6 per cent in the past week. The stock has been volatile over the last few weeks, moving up one week and falling in the next. This leaves the near-term outlook mixed for the stock. The stock can remain range-bound between ₹550 and ₹610 for some time. A breakout on either side of ₹550 or ₹610 will then determine the next trend. Traders can stay out of this stock until a clear trend and a trade signal emerges. A strong break above ₹610 can take Tata Steel higher to ₹635 or ₹650 in the short term. A break above ₹650 is required to mark the end of the corrective fall that has been in place since late January. The stock can then target ₹680 and ₹700 levels again. On the other hand, if Tata Steel breaks below ₹550 in the coming days, it can fall to ₹539 — a key 38.2 per cent Fibonacci retracement support level. A break below this support can drag it to ₹525. Such a fall will strengthen the downtrend and drag the stock to ₹500 or ₹470.

 

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