Weekly Trading Guide

SBI (272.9)

SBI began the week on a weak note and fell about 2 per cent initially. However, the stock managed to reverse sharply higher from the low of ₹266.3, recovering all the loss. The price action on the charts over the last couple of weeks leaves the near-term outlook positive. A key support is at ₹267, which is likely to limit the downside. An upmove to ₹280 and ₹285 is likely in the near term. A cluster of resistances is poised in the ₹280-285 zone. Inability to breach this resistance region can drag SBI to ₹270 again. But a strong break above ₹285 will boost the momentum and increase the likelihood of the stock rallying to ₹295 and ₹300 in the coming weeks. Short-term traders with a high-risk appetite can go long at current levels and accumulate at ₹269. Stop-loss can be placed at ₹265 for the target of ₹285. Revise the stop-loss higher to ₹276 as soon as the stock moves up to ₹279. The 200-week moving average at ₹260 is a crucial support. The outlook will turn negative only if SBI declines below this support.

ITC (₹277.8)

ITC has been stuck in the ₹273-284 sideways range for more than a month now. Within this range, the near-term outlook is bullish. ITC has risen and closed above the 21-day moving average at ₹276.5, which will now act as a good support. As long as the stock trades above this support, an upmove to ₹284 is possible in the near term. A pull-back from ₹284 levels will keep the sideways range intact and take the stock lower to ₹277-275 again. But a decisive close above ₹284 will mark the end of the sideways consolidation. It will then take the stock initially to ₹289. A further break above ₹289 will then trigger a fresh rally, targeting ₹301. The bullish outlook will get negated only if ITC breaks below 273. The next target is ₹265. But the price action on the chart keeps the bias positive and leaves the possibility high of the stock breaching ₹284 in the coming days. As such, investors can continue to hold the long positions taken at ₹282, ₹278 and ₹272. Retain the stop-loss at ₹262.

Infosys (₹741.1)

Infosys surged to a high of ₹757.8, but later gave back most of the gains. The near-term outlook is unclear. The 21-day moving average resistance is at ₹747. A decisive close above it is needed to turn the outlook to positive. Such a break can take Infosys higher to ₹790 and ₹800. But as long as the stock trades below ₹747, a dip to ₹725 cannot be ruled out in the near term. A break below ₹725 will then take the stock lower to ₹710 or even ₹700 thereafter. However, a further fall below ₹700 looks unlikely. A cluster of supports poised between ₹710 and ₹700 is likely to limit the downside. An upward reversal from the ₹710-700 support zone will trigger a fresh rally to ₹745 and ₹750. A further break above ₹750 will then give rise to targets of ₹770 and ₹790. Medium-term traders can make use of dips to go long at ₹725. Accumulate longs at ₹720 and ₹715. Stop-loss can be placed at ₹680 for a target of ₹790. Revise the stop-loss higher to ₹735 as soon as the stock moves up to ₹755.

RIL (₹1,226.7)

RIL inched lower for the third consecutive week. The 21-day moving average resistance at ₹1,248 continued to cap the upside in the stock for the second consecutive week. RIL can remain range-bound between ₹1,200 and ₹1,250 for some time. A breakout on either side of ₹1,200 or ₹1,250 will decide the direction of the next move. A strong break above ₹1,250 can take the stock initially to ₹1,260. A further decisive break above ₹1,260 will boost the momentum and increase the likelihood of the stock rallying to ₹1,300 and ₹1,320 in the short term. On the other hand, if RIL declines decisively below ₹1,200, the stock will come under renewed pressure. In such a scenario, RIL can fall initially to ₹1,175. A further break below ₹1,175 will then increase the likelihood of the stock extending its fall to ₹1,145. It will also confirm the head and shoulder reversal pattern on the daily chart. This is a bearish pattern, which may keep the stock under pressure. Investors can hold the long positions taken at ₹1,260, ₹1,245 and ₹1,225. Retain the stop-loss at ₹1,180 for the target of ₹1,420.

Tata Steel (₹507.1)

Tata Steel has been moving higher as expected, but at a slow pace. The stock was up 1 per cent last week. The short-term outlook continues to remain positive. A near-term resistance is at ₹517 — the 100-day moving average. A pull-back from this resistance can trigger a fall to ₹495 and ₹490. A further fall below ₹490 looks unlikely at the moment. An upward reversal from the ₹495-490 support zone will take the stock higher to ₹515 levels again. An eventual break above the 100-day moving average resistance will then increase the likelihood of the stock rallying to ₹545 and ₹550 thereafter. The upmove from the January low of ₹442 is significant as it happened from the 200-week moving average support. Whether the current move is a trend reversal or just a corrective rally will become clear in the coming weeks. Short-term traders can hold the long positions taken at ₹502. Retain the stop-loss at ₹480 for the target of ₹545. Revise the stop-loss higher to ₹510 as soon as the stock moves up to ₹517.

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