Weekly Trading Guide

SBI (₹282.6)

SBI made a high of ₹293.4 initially, but came-off from there to close 2.7 per cent lower for the week. However, the price action as well as the indicators on the chart show that the short-term bias remains positive. The 21-day moving average 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 short term. Cluster of supports are poised in the ₹281 and ₹279 region, which can limit the downside in the near term. Resistance is at ₹293. A range-bound move between ₹279 and ₹293 is possible in the near term. An eventual break above ₹293 will trigger a fresh rally to ₹311. A further break above ₹311 will then increase the likelihood of the stock targeting ₹320 and ₹322. Medium-term traders can hold the long positions taken at ₹282 and ₹279. 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 ₹294. The bullish outlook will get negated if SBI declines decisively below ₹279. The ensuing target is ₹271.

ITC (₹280.45)

ITC surged over 3 per cent intra-week but fell from the high of ₹286.35, giving back some of the gains. The strong rally breaching the 200-day moving average last week has eased the downside pressure. It is also turning the bias positive. Also the pull-back from the high of ₹286.35 seems to be lacking strength. Immediate support is at ₹279. As long as the stock trades above this support, there is a strong likelihood of it breaking above ₹285. Such a break can take ITC initially higher to ₹290. Inability to breach ₹290 can drag the stock lower to ₹285 and ₹280 again. But a strong break above ₹290 will boost the momentum and take ITC to ₹297 and ₹300. Traders can hold the long positions taken at ₹283 and ₹280. Retain the stop-loss at ₹273 for the target of ₹298. Revise the stop-loss higher to ₹285 as soon the stock moves up to ₹289. Key support below ₹279 is at ₹275. The outlook for the stock will turn negative only if it declines below ₹275. The next targets are ₹270 and ₹265. But such a strong fall, breaking below ₹275, looks unlikely at the moment.

Infosys (₹620.4)

Infosys fell below the key support level of ₹631 last week, as expected. The stock tumbled 4.6 per cent and closed decisively below the 200-day moving average. The downtrend is intact. Key resistances are at ₹631 and ₹637, which are likely to cap the upside in the near term. Intermediate rally to these resistance levels is likely to find fresh sellers coming into the market. Immediate support is at ₹608, which is likely to be tested in the near term. A bounce from this support can trigger an intermediate bounce to ₹630 or ₹637. In such a scenario, a range-bound move between ₹608 and ₹637 can be seen for some time. However, the outlook will continue to remain negative. An eventual break below ₹608 will increase the likelihood of the stock tumbling towards ₹590. The region between ₹600 and ₹590 is a crucial support. Whether Infosys manages to reverse higher from this support zone or not will be key in deciding the direction of the next move. As such, the price action in the ₹600-₹590 support zone will need a close watch.

RIL (₹1,102.8)

RIL snapped its three-week rally last week. The stock made a high of ₹1,155 and reversed lower, giving back all the gains. RIL has closed 2.2 lower for the week. The 55-day moving average resistance has capped the upside. Immediate support is at ₹1,097. The next significant support is at ₹1,088 — the 21-day moving average. A dip to test these supports cannot be ruled out in the near term. But the outlook will turn negative only if RIL declines decisively below ₹1,088. A strong break below ₹1,088 can drag the stock lower to ₹1,055 or ₹1,045. On the other hand, if RIL manages to bounce back from either ₹1,097 or ₹1,088, an up-move to ₹1,150 and ₹1,155 can be seen again. A strong break above ₹1,155 will boost the momentum. Such a break will then increase the likelihood of the stock targeting ₹1,200 and ₹1,210 over the short term. Traders can hold the long positions taken on dips last week at ₹1,115 and ₹1,105. Retain the stop-loss at ₹1,075 for the target of ₹1,195. Revise the stop-loss higher to ₹1,130 as soon the stock moves up to ₹1,155.

Tata Steel (₹539.9)

Tata Steel tumbled about 6 per cent last week. The stock’s failure to sustain above ₹600 and a subsequent sharp fall last week is increasing the downside pressure on the stock. The stock plummeted 11 per cent after making a high of ₹610 on November 14. Crucial support is in the ₹535-530 region. If the stock manages to bounce back higher from this support zone, a relief rally to ₹560 and ₹570 is possible. But Tata Steel looks vulnerable to break below the ₹535-530 support zone. Such a break will drag the stock lower to ₹500 and ₹490 over the short term. A bounce from the ₹500-₹490 support zone can trigger a corrective rally to ₹540 and ₹550 thereafter. But a strong break below ₹490 will increase the likelihood of the stock tumbling towards ₹460 over the medium term. High-risk appetite traders can go short at current levels and on rallies at ₹555 and ₹565. Stop-loss can be placed at ₹590 for the target of ₹465. Revise the stop-loss to ₹527 as soon as the stock moves down to ₹505.

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