Weekly Trading Guide

Near-term resistance ahead for SBI (₹260.9)

SBI fell initially last week, but managed to claw-back later. The stock tumbled about 3 per cent to make a low of ₹250.3 and reversed sharply higher, recovering all the loss. Near-term resistance is in the ₹263-265 zone. If the stock manages to breach ₹265 decisively, it can move up to ₹270 or ₹272 initially. Further break above ₹272 will turn the outlook positive. It will then pave the way for the next targets of ₹280 and ₹285. But inability to break above the ₹270-272 resistance zone can trigger a pull-back move to ₹263 or ₹260. The region between ₹257 and ₹255 is a crucial support to watch. SBI will come under pressure if it declines below ₹255 decisively. In such a scenario, the possibility will increase of the stock tumbling towards ₹240 or even ₹234 thereafter. Short-term traders with high-risk appetite can go short on a break below ₹255. Stop-loss can be placed at ₹263 for the target of ₹243. Revise the stop-loss lower to ₹253 as soon as the stock moves down to ₹249.

Short-term outlook positive for ITC (₹270.4)

The support in the ₹267-₹266 region, as expected, limited the downside for ITC. The stock made a low of ₹266.2 and bounced back from those levels, recovering all the loss, and closed 1.1 per cent higher for the week. This retains the positive bias. The indicators on the chart are also positive. The 21-day moving average has crossed over the 200-day moving average and is on the verge of crossing over the 100-day moving average. This is a positive sign, indicating that the downside could be limited in the coming days. Resistance lies between ₹277 and ₹278, which is likely to be tested. A strong break above ₹278 will boost the momentum. Such a break can take ITC higher to ₹285 and ₹287. On the other hand, if the stock fails to break above ₹278, a pull-back move to ₹273 or ₹270 is possible. In such a scenario, the stock may remain range-bound between ₹267 and ₹277 for some time. The bias will, however, remain positive. Investors can hold the long positions and retain the stop-loss at ₹220.

Bullish outlook intact for Infosys (₹1,348.3)

Infosys surged 3 per cent last week. The 21-day moving average at ₹1,306 continues to provide strong support. The short-term outlook will turn negative only if the stock declines decisively below the 21-day moving average. The next targets are ₹1,250 and ₹1,235. But such a fall looks less probable as the price action on the weekly chart last week indicates that Infosys is finding fresh buying interest around the psychological ₹1,300 mark. The stock retains its bullish outlook. There is also high probability of it sustaining above its the 21-day moving average support in the coming days. Immediate resistances are at ₹1,360 and ₹1,380. A strong break and a decisive weekly close above ₹1,380 will pave the way for long-term targets of ₹1,450 and ₹1,475 levels. The ₹1,450-1,475 zone is a crucial long-term resistance region. Investors holding long positions should look to book some profits at these levels. Both medium- and long-term investors can book partial profits at ₹1,450.

RIL hovers below a key resistance (₹1,128.5)

RIL extended its rally for the second consecutive week and was up about 3 per cent. The stock has skyrocketed over 15 per cent over the last couple of weeks. A key resistance is near the current levels of ₹1,140-1,150, which is likely to be tested in the near term. Whether RIL breaks above ₹1,150 or not will decide the next move. A strong break above ₹1,150 will take the stock higher to ₹1,180. Further break above ₹1,180 will see the rally extending to ₹1,200 or even higher. On the other hand, if RIL fails to breach ₹1,150 in the coming days, it can come under pressure. In such a scenario, the possibility is high of the stock reversing lower on the back of profit-booking. A pull-back from the ₹1,140-1,150 resistance region can trigger a corrective fall to ₹1,060 or even ₹1,035 over the short term. The levels of ₹1,060 and ₹1,035 are key short-term supports that are likely to limit the downside. A fall below ₹1,035 looks less probable at the moment as fresh buyers are likely to emerge at lower levels.

Downtrend is intact for Tata Steel (₹503.4)

Tata Steel plummeted 10 per cent last week. The sharp fall in the past week has dragged the stock well below the crucial support level of ₹540. Cluster of resistances between ₹530 and ₹550 can cap the upside as fresh sellers are likely to emerge at higher levels. A fall to ₹475 or ₹470 is likely in the coming days. Short-term traders can wait for a bounce back and go short at ₹525 and ₹540. Stop-loss can be placed at ₹560 for the target of ₹475. Revise the stop-loss lower to ₹510 as soon as the stock moves down to ₹495. The region between ₹475 and ₹470 is a crucial support for Tata Steel. The 50 per cent Fibonacci retracement level and a long-term trendline supports are poised between this region. A rally from this support zone can trigger a relief rally to ₹530 and ₹550. But a break below ₹470 will increase the likelihood of the stock tumbling towards ₹425 or even ₹400 thereafter. As such, the price action around the ₹475-470 support zone will need a close watch.

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