Weekly Trading Guide

SBI (302.5)

SBI surged breaking above the key ₹300-₹302 resistance zone last week, but failed to get a strong follow-through buying. The stock made a high of ₹307.2 and has come-off, giving back some of the gains. However, the outlook remains positive. Immediate support is at ₹300 and the next key support is in the ₹295-293 region. An up-move to ₹310 and ₹312 is likely in the near term. A break above ₹312 will increase the likelihood of the up-move extending towards ₹320 and ₹322. As being reiterated over the last couple of weeks, the region around ₹322 is a crucial long-term resistance and the price action around it will need a close watch. The stock will come under pressure only if it declines below ₹293 decisively. The next targets are ₹285 and ₹280. But a fall below ₹293 looks unlikely at the moment as fresh buyers are likely to emerge at lower levels. Traders can hold the long positions taken above ₹294 with a revised stop-loss at ₹301. Move the stop-loss higher to ₹305 as soon as SBI goes up to ₹309. Book profits at ₹318.

ITC (₹295.4)

ITC surged over 5 per cent last week breaking above the key 100-day moving average resistance level of ₹288. The up-move in the stock has thus gained momentum. The key immediate resistances at ₹297 and ₹301 are likely to be tested in the near term. Inability to breach ₹301 can trigger an intermediate pull-back move to ₹290 or ₹288. However, the downside is likely to be limited. Strong support in the ₹288-285 region can limit the downside in the stock. Fresh buyers are likely to around this support zone. Indicators on the charts are also positive. A golden cross is in the making. The 21-day moving average is on the verge of crossing over the 200-day moving average. This is a positive signal, indicating that the downside could be limited. As such, ITC is likely to breach ₹301 eventually. Such a break can take the stock higher initially to ₹308 and ₹310. A further break above ₹310 will then increase the likelihood of the stock revisiting ₹320 and ₹325 levels. Medium-term investors who have taken long positions at ₹282 and ₹278 can hold it. Retain the stop-loss at ₹262.

Infosys (₹683.7)

Infosys was up 3.5 per cent last week. The stop-loss on the short positions recommended has been hit. Though the stock has rallied, the price action on the daily chart indicates that the up-move still lacks strength. This leaves the outlook mixed. Support is in the ₹675-670 region. The stock will come under pressure if it breaks below ₹670. Such a break can take drag it to ₹660 and ₹650. But, if Infosys manages to sustain above ₹670, the possibility is high of it breaking above the immediate resistance level of ₹685. Such a break will see the current up-move extending towards ₹710 and ₹720. The level of ₹720 is a crucial resistance. Whether Infosys breaches this hurdle or not will determine the direction of the next move. A strong break above ₹750 will turn the outlook to positive. In such a scenario, Infosys can target ₹750 and ₹760 thereafter. On the other hand, a pull-back from ₹720 can drag the stock lower to ₹700 and ₹680 levels. In that case, Infosys can remain in a broad sideways range between ₹640 and ₹720 for some time.

RIL (₹1,097.7)

RIL is retaining its sideways movement in the ₹1,050-1,150 range. Within this region, the stock was stuck in a narrow ₹1,089-1,119 range last week. The view remains the same. The near-term outlook is unclear. A breakout on either side of ₹1,050 or ₹1,150 is needed to determine the direction of the next move. The 200-day moving average support is at ₹1,075. A break below this support can take RIL lower to ₹1,060. It will also increase the possibility of the stock declining below ₹1,050. A fall below ₹1,050 will see RIL testing ₹1,020. A break below ₹1,020 will increase the possibility of the stock tumbling towards ₹900 or even ₹980. But if RIL sustains above the 200-day moving average support, the bias will remain positive for a break above ₹1,150. Such a break will ease the downside pressure and target ₹1,190 and ₹1,200. Only a strong break and a decisive close above ₹1,200 will turn the outlook to positive. The next targets are ₹1,250 and ₹1,300. Medium-term investors can hold the long positions taken at ₹1,125 and ₹1,095. Retain the stop-loss at ₹1,025.

Tata Steel (₹474.7)

Tata Steel extended its downmove last week as expected. The stock was down 3 per cent. A crucial long-term trend support is at ₹460, the 200-week moving average is at ₹440 and the 100-month moving average is near ₹430. The indicators on the charts remain negative. As such, Tata Steel can retain its downtrend in the short term and fall to test the above-mentioned supports. But whether it manages to bounce from the ₹460-430 support zone or not will be key in deciding the direction of the next move. As such, the price action around these supports will need a close watch. A bounce from this support zone can trigger a corrective rally initially to ₹480 and ₹485. A further break above ₹485 will see the relief rally extending towards ₹500 or even ₹525. On the other hand, if Tata Steel breaks below ₹430, it can extend the current dowmove to ₹410 and ₹400. Such a fall will be bearish from a long-term perspective. It will then increase the possibility of the stock tumbling further to revisit ₹300 levels over the long term.

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