Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on February 09, 2019 Published on February 09, 2019

SBI (₹285.0)

SBI oscillated between ₹278 and ₹294 last week and closed on a flat note. The weekly candles reflect indecisiveness in the market and leaves the outlook unclear. The price action will need a close watch to get a cue on the next move. As long as the stock trades above ₹275, a range-bound move between ₹275 and ₹295 is possible. A breakout on either side of ₹275 or ₹295 will determine the direction of the next move. The outlook will turn negative if SBI declines decisively below ₹275. Such a break will keep intact the downtrend that has been in place since January. It will also increase the likelihood of the stock extending the downtrend towards ₹265 and ₹260. On the other hand, if SBI manages to sustain above ₹275, a bounce to ₹290 and ₹295 can be seen again. A strong break above ₹295 will bring fresh bullish momentum. It will then take the stock up towards the ₹305-₹307 resistance zone. Traders can stay out of the market until a clear trend emerges.

ITC (₹275.8)

ITC was range-bound between ₹273 and ₹282 last week. The stock has been broadly range-bound over the last couple of weeks. However, the price action on the daily chart leaves the bias negative. The indicators on the charts are also negative. It is now on the verge of crossing below the 100-day moving average. This is a negative signal indicating that the upside could be limited. This leaves the possibility high of the stock breaking below the ₹275-₹273 support zone. Such a break can drag the stock lower to ₹265 over the short term. The level of ₹265 is a strong medium-term support and a further break below it looks unlikely. A bounce from ₹265 will take the stock initially higher to ₹270 and ₹275. The region between ₹280 and ₹283 is a crucial resistance. The outlook will turn positive on a strong break above ₹283. The next target is ₹289. Investors can hold the long positions taken at ₹282 and ₹278. Accumulate longs at ₹272 and ₹267. Retain the stop-loss at ₹262.

Infosys (₹759.5)

Infosys inched higher but seems to be lacking strength. The support at ₹745 is holding well. A break below it can take the stock lower to ₹735 or even ₹720. But such an intermediate fall is likely to attract fresh buyers to emerge at lower levels and limit the downside. The indicators on the chart are also giving positive signals. The 55-day moving average has crossed over the 100-day moving average. This is a bullish signal, indicating that the downside could be limited. As such, the outlook will continue to remain bullish. A key near-term resistance is at ₹775, which has capped the upside in the past week. A strong break above it is needed for the stock to gain fresh momentum. Such a break can take Infosys up to ₹800 and ₹810. A break above ₹810 can then target ₹830. Medium-term traders can hold the long positions taken at ₹722 with a revised stop-loss at ₹735. Move the stop-loss higher to ₹755 as soon as the stock moves up to ₹780. Book profits at ₹815.

RIL (₹1,277.3)

RIL surged about 6 per cent intra-week to make a high of ₹1,320.85. However, the stock reversed lower from the high, giving back some of the gains and closed 2.4 per cent higher for the week. Immediate support is in the ₹1,260-₹1,255 region, which is likely to be tested in the near term. As long as RIL trades above ₹1,255, there is a strong likelihood of it rallying towards ₹1,330. But if RIL breaks below ₹1,255, it can dip initially to ₹1,220. A break below ₹1,220 can drag the stock lower to ₹1,200 or ₹1,190. The region between ₹1,200 and ₹1,190 is a strong short-term support zone, which is likely to limit the downside. A break below ₹1,190 looks unlikely as fresh buyers are likely to emerge at lower levels. So, such a dip to ₹1,200-₹1,190 should be considered as a good buying opportunity from a medium-term perspective. Investors can go long on dips at ₹1,260, ₹1,245 and ₹1,225. Stop-loss can be placed at ₹1,180 for the target of ₹1,420.

Tata Steel (₹469.5)

Tata Steel seems does not seem to be gaining much momentum. The stock surged over 3 per cent intra-week and made a high of ₹491. However, it fell sharply from the high, giving back all the gains and closed 0.8 per cent lower for the week. The weekly candles reflect indecisiveness in the market. The price action in the coming days will need a close watch to get a cue on whether the on-going downtrend has ended or not. The resistance at ₹480 is holding well as of now. A strong break above it is needed for a corrective rally towards ₹500 and ₹530. But as long as the stock remains below ₹480, revisiting ₹450 and ₹440 levels is possible. In such a scenario, a range-bound move between ₹440 and ₹480 is possible. As being reiterated in this column, the region between ₹440 and ₹430 is a crucial support zone. The stock will come under pressure again if it breaks decisively below ₹430. In such a scenario, a fall to ₹400 is possible.


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