Weekly Trading Guide

SBI (281.2)

SBI rose last week as expected. The stock surged 3 per cent and gained for the third consecutive week. The broader bullish outlook remains intact. Immediate support is in the ₹280-279 region. An intermediate dip to ₹272 is possible if SBI breaks below this support. A further fall below ₹272 is unlikely. But as long as SBI trades above ₹279, there is a strong likelihood of it breaking above the immediate resistance level of ₹285. Such a break will then boost the momentum and take the stock up to ₹295 in the short term. Inability to breach ₹295 can trigger a pull-back move to ₹285 and ₹283. But a strong break above ₹295 will take SBI initially to ₹300. A further break above ₹300 will then pave way for the medium-term targets of ₹310 and ₹320. Investors with a medium-term perspective can go long at current levels and accumulate on dips at ₹279 and ₹276. Stop-loss can be placed at ₹269 for the target of ₹305. Revise the stop-loss higher to ₹286 as soon as the stock moves up to the level of ₹292.

ITC (₹292)

ITC surged 5.1 per cent last week breaking above the crucial 200-day moving average resistance level of ₹284. The 200-day moving average was capping the upside in the stock since late January. The near-term outlook is positive. Immediate support is at ₹288, which can limit the downside in the near term. As long as ITC trades above ₹288, an up-move to ₹300 and ₹303 is likely. Cluster of resistances is poised between ₹300 and ₹303. Inability to breach this resistance zone can trigger a pull-back move to ₹290 and ₹288 again. But a strong break above ₹303 will boost the momentum and pave way for the next target of ₹310. On the other hand, if ITC breaks below ₹288, it can decline to ₹284. A further fall below ₹284 is unlikely as fresh buyers are likely to emerge around this level. As such, investors can continue to hold the long positions taken at ₹282, ₹278 and ₹272 with a revised stop-loss at ₹273. Move the stop-loss higher to ₹285 as soon as the stock moves up to ₹299. Book profits at ₹310.

Infosys (₹712.55)

Infosys is selling under pressure. The stock tumbled 3.8 per cent last week, breaking below the key support level of ₹725. This sharp fall has turned the near-term view to negative. There is a head and shoulders pattern formed on the daily chart — a bearish reversal pattern. The neck-line of this pattern is at ₹728, which can cap the upside in the near term. As long as Infosys trades below ₹728, a fall to ₹700 is possible. If the stock manages to bounce from ₹700, an up-move to ₹720 and ₹725 can be seen again. But a strong break below ₹700 will increase the downside pressure. Such a break will then increase the likelihood of the stock extending its fall to ₹685 or even ₹675 — the price target of the head and shoulders pattern. A further fall below ₹675 is less likely at the moment. But medium-term traders can hold the long positions taken last week at ₹725, ₹720 and ₹715. Retain the stop-loss at ₹680 for the target of ₹790. Revise the stop-loss higher to ₹735 as soon as the stock moves up to ₹755.

RIL (₹1,266.6)

RIL snapped its three-week fall and surged over 3 per cent last week. The strong rally has taken RIL decisively above the 21-day moving average resistance at ₹1,243. This hurdle was capping the upside over the last three weeks. It will now act as a good near-term support. If RIL declines below this support, a dip to ₹1,200 is possible. But such a fall looks less probable as intermediate dips to ₹1,243 may find fresh buyers coming into the market. As such, a further up-move to ₹1,315-₹1,320 is likely in the short term. Inability to breach ₹1,320 can trigger a pull-back move to ₹1,260 and ₹1,250. But a decisive weekly close above ₹1,320 will boost the momentum and potential for RIL to target ₹1,400 or even higher levels over the long term. The outlook for the stock will turn bearish only if RIL declines below the psychological level of ₹1,200. But such a fall looks unlikely at the moment. 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 (₹508)

Tata Steel extended its up-move last week but failed to sustain higher. The stock made a high of ₹526.5 and reversed sharply lower, giving back almost all the gains. Though the short-term outlook is bullish, an intermediate dip is possible before it resumes its up-move. Immediate resistance is at ₹515. As long as the stock trades below this hurdle, a dip to ₹495 is likely. A break below ₹495 can drag the stock to ₹485. However, a further fall below ₹485 is unlikely. An upward reversal from the ₹495-485 support can take Tata Steel higher again to ₹510 and ₹515. A decisive break above ₹515 will boost the momentum and increase the likelihood of the stock extending its rally to test the crucial long-term resistance of ₹550-560. Traders with a medium-term perspective can make use of dips to go long at ₹502, ₹497 and ₹488. Stop-loss can be placed at ₹480 for the target of ₹540. Revise the stop-loss higher to ₹512 as soon as the stock moves up to ₹525.

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