Weekly Trading Guide

Short-term outlook is bullish for SBI (₹290.3)

SBI fell over 3 per cent in the initial part of last week. However, the stock managed to claw back from the low of ₹273.5, recovering all the losses and closed 2.6 per cent higher. This leaves the outlook bullish. The indicators on the charts are also positive. The 21-day moving average has crossed the 200-day moving average. This is a positive signal, indicating that the downside could be limited. Immediate resistance is in the ₹292-293 region. Inability to breach this hurdle can drag SBI lower to ₹280 and ₹275 again. The stock can then remain range-bound in the band between ₹275 and ₹293 for some time. But a strong break above ₹293 will take SBI higher to ₹311. A further decisive break above ₹311 will then increase the likelihood of the stock extending its upmove to ₹320 and ₹322. Medium-term traders who have taken long positions last week at ₹282 and ₹279 can hold them. Retain the stop-loss at ₹269 for the target of ₹308. Revise the stop-loss higher to ₹287 as soon as the stock moves up to the level of ₹294.

Near-term view is unclear for ITC (₹276.2)

ITC was stuck in a narrow range between ₹273 and ₹279 last week. The near-term view continues to remain mixed. The support at ₹273 is holding well. The stock will, however, come under renewed pressure only if it breaks below the crucial support level of ₹271. Such a break can drag the stock lower to ₹265 or even ₹260 over the short term. On the other hand, the 200-day moving average at ₹279 is a key resistance to watch. The downside pressure would ease if ITC manages to breach this hurdle. A strong break above ₹279 will take the stock initially higher to ₹288 or ₹290. A pull-back from the ₹288-290 resistance region can take the stock lower to ₹280 and ₹275 again. But a strong break above ₹290 will turn the outlook to positive and take ITC to ₹297 and ₹300. Traders holding long positions at ₹283 and ₹280 should remain cautious. Retain the stop-loss at ₹273 for the target of ₹298. Revise the stop-loss higher to ₹285 as soon as the stock moves up to ₹289.

Infosys hovers above a crucial support (₹650.4)

Infosys fell last week, but at a slower pace. The stock was down 1.7 per cent for the week. A key near-term support is at ₹636 — the 200-day moving average. Whether Infosys breaks below this support or not will determine the direction of the next move. A decisive break below ₹636 will take the stock initially lower to ₹631 — the 38.2 per cent Fibonacci retracement support level. If Infosys manages to reverse higher either from ₹636 or ₹631, an up-move to ₹675 and ₹680 is possible in the near term. Cluster of resistances are poised in between ₹685 and ₹700. The outlook will turn positive for the stock only if it manages breach the psychological level of ₹700. But such a strong up-move looks less probable now. On the other hand, if Infosys breaks below the Fibonacci retracement support level of ₹631, the downside pressure would increase. In such a scenario, the downtrend that has been in place since October will remain intact. It will then increase the likelihood of the stock extending its fall to the levels of ₹600 and ₹590.

Key resistance ahead for RIL (₹1,127.5)

RIL has been moving higher over the last three consecutive weeks. The stock was up 3 per cent last week and surged about 8 per cent in the last three weeks. Immediate resistances are at ₹1,137 and ₹1,144, which are likely to be tested in the coming days. A strong break above ₹1,144 will take RIL initially higher to ₹1,162. A further decisive break above ₹1,162 will then boost the bullish momentum. Such a break will then increase the likelihood of the rally extending to ₹1,200 and ₹1,210 thereafter. Short-term traders with high-risk appetite can go long dips at ₹1,115 and ₹1,105. Stop-loss can be placed at ₹1,075 for the target of ₹1,195. Revise the stop-loss higher to ₹1,130 as soon as the stock moves up to ₹1,155. On the other hand, if RIL fails to breach ₹1,144 and reverses lower, it can fall to ₹1,115 and ₹1,100. A strong break below ₹1,100 will then increase the possibility of the fall extending towards ₹1,075 and ₹1,050 thereafter. In such a scenario, RIL can remain range-bound between ₹1,050 and ₹1,150 for some time.

Supports to limit fall in Tata Steel (₹574.1)

Tata Steel surged over 6 per cent intra-week and made a high of ₹610. But it failed to sustain higher and fell sharply giving back almost all the gains. The near-term outlook is mixed. Though a further fall cannot be ruled out, the presence of a series of supports may restrict the pace of the downmove from the current levels. Immediate support is at ₹570. Next significant support is in the ₹565-555 band. The stock will come under renewed pressure only if it declines decisively below ₹555. The next targets are ₹540 and ₹535. However, such a strong fall breaking below ₹555 looks less likely at the moment. An upward reversal from this support zone will take the stock higher to ₹585 and ₹600 levels again. Key resistance is in the ₹590-600 region. A strong break and a decisive close above ₹600 is needed for Tata Steel to gain fresh momentum. Such a break will bring fresh buying interest into the market and increase the likelihood of the stock rallying towards ₹625 and ₹640 thereafter.

 

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