Weekly Trading Guide

SBI (₹290.4)

SBI tumbled 4 per cent intra week, triggering the stop-loss in the recommended long positions. However, the stock had managed to reverse sharply higher from the low of ₹280.15, recovering all the loss. Immediate support is at ₹288. As long as the stock remains above this support, the near-term outlook will be positive. While above ₹288, an up-move to ₹300 is possible. Inability to breach ₹300 can trigger a pull-back move to ₹290 or ₹288. But a strong break above ₹300 will ease the pressure and can take the stock higher to ₹311 — a crucial short-term resistance. Further break above ₹311 will then increase the likelihood of the rally extending to ₹322. But if SBI fails to breach ₹311, a pull-back move to ₹300 or even ₹290 is possible. In such a scenario, SBI can remain range-bound between ₹288 and ₹310 for some time. The bullish outlook will get negated if SBI declines below ₹288. Such a fall can drag it to ₹280 again. A strong break below ₹280 will turn the outlook to negative. The ensuing targets on a break below ₹280 are ₹275 and ₹270.

ITC (₹306.9)

ITC fell sharply, breaking below the key support level of ₹307 last week. The stock tumbled over 4 per cent intra-week and touched a low of ₹295.65. However, it has bounced sharply higher from the low of ₹295.65, recovering most of the loss. Key resistances are ahead at ₹310 — the 21-day moving average and at ₹313 — a trendline hurdle. The next move will be determined by whether ITC breaks above these hurdles. Inability to breach ₹313 can pull the stock lower to ₹300 levels again. In such a scenario, ITC can remain range-bound between ₹295 and ₹313. On the other hand, if ITC breaks above ₹313 decisively in the coming days, an up-move to ₹320 is possible. Further break above ₹320 will then target ₹327 — the next crucial resistance level. As being reiterated in this column, a strong break above ₹327 will trigger a fresh rally, targeting ₹360 over the medium term. Investors can hold the long positions and retain the stop-loss at ₹265. The outlook will turn to negative if the stock declines below ₹295. The next targets are ₹290 and ₹284.

Infosys (₹735.2)

Infosys was stuck in a narrow range between ₹729 and ₹747 last week. The weekly candles reflect indecisiveness in the market. The region between ₹753 and ₹755 is a crucial resistance. Significant supports are poised at ₹717 and ₹710 and is a key support zone. A breakout on either side of ₹755 or ₹710 will decide the next leg of move. The stock will gain fresh momentum only if it breaks below ₹755. This break can take Infosys higher to ₹770 or ₹800. On the other hand, if the stock declines below ₹730, a fall to ₹717 and ₹710 is possible in the near term. A strong break and decisive close below ₹710 will increase the likelihood of the stock falling to ₹690. Such a fall will be the first sign of reversal of the long-term uptrend that has been in place since September 2017. Further break below ₹690 will confirm the trend reversal and drag the stock to ₹660 on the back of profit-booking. Long-term investors can move the stop-loss higher to ₹703.

RIL (₹1,252.8)

RIL fell about 2 per cent last week. Though the weekly candles are mixed, the bias on the daily chart is bullish. The price action indicates that the stock lacks strong selling interest below ₹1,250. A key trendline support is at ₹1,225. The outlook will turn to negative only if RIL declines below ₹1,225. Such a break can drag the stock lower to ₹1,180 initially on the back of profit-booking. Further break below ₹1,180 will increase the selling pressure and see the corrective fall extending to ₹1,160 thereafter. On the other hand, if RIL manages to sustain above ₹1,225, there is a strong likelihood of the stock seeing an up-move to ₹1,305 and ₹1,310 in the near term. A strong break and a decisive close above ₹1,310 will boost the momentum. This break will see the rally extending to ₹1,340 and ₹1,360 over the short term. Traders who have taken long positions at ₹1,276 and ₹1,260 can hold. Retain the stop-loss at ₹1,220 for the target of ₹1,345. Revise the stop-loss higher to ₹1,285 as soon as the stock moves up to ₹1,305.

Tata Steel (₹615.3)

Tata Steel fell sharply in the initial part of the week. However, the ₹590-575 support cluster had halted the fall and limited the downside as expected. The stock has reversed sharply higher from its low of ₹583.35, recovering most of the loss. An up-move to ₹635 and ₹640 is likely in the near term. A decisive weekly close above ₹640 will confirm the reversal of the downtrend that has been in place since January. Such a break will boost the momentum and take the stock higher to ₹680 and ₹700. Further break above ₹700 will then increase the likelihood of the stock revisiting ₹750 levels over the medium term. Traders who have taken long positions at ₹619 and accumulated at ₹605, ₹590 and ₹585 can hold. Retain the stop-loss at ₹560. The outlook will turn negative only if Tata Steel declines below ₹575 — the 21-week moving average. Such a break can drag it to ₹550. But such a fall looks unlikely. The price action on the chart suggests that strong buying interest is emerging below ₹600.

 

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