Weekly Trading Guide

Upmove gains momentum in SBI (297.7)

The upmove in SBI seems to be gaining momentum. The stock surged 5.8 per cent to close higher for the fourth consecutive week. But series of resistances ahead can restrict the pace of the upmove in the near term. Immediate resistance is at ₹300. A break above it can take SBI higher to ₹305. A strong break above ₹305 can then target ₹310-₹315 or even ₹320 over the medium term. The region between ₹315 and ₹320 is a crucial medium-term resistance. Whether SBI breaks above ₹320 or not will decide the direction of the next move. On the other hand, if SBI reverses lower from ₹305 a near-term dip to ₹300 or ₹297 is possible. Significant support is between ₹297 and ₹295. The stock will come under pressure only if it declines decisively below ₹295. The next targets are ₹285 and ₹280. But such a sharp fall looks unlikely. Investors can hold the long positions at ₹283 with a revised stop-loss at ₹286. Move the stop-loss higher to ₹297 as soon as the stock moves up to ₹301. Book profits at ₹305.

Bullish outlook is intact for ITC (₹290.9)

ITC closed on a mixed note last week. The stock was volatile between ₹289 and ₹297. A key support is at ₹288. As long as the stock sustains above this support, the overall bullish outlook will remain intact. The indicators on the charts are also positive. The 21-day moving average has crossed over the 100-day moving average. It is now on the verge of crossing over the 200-day moving average. This is a bullish signal, indicating that the downside could be limited. As such, ITC can move up to test the ₹300-303 resistance cluster. A pull-back from this resistance zone can trigger a corrective fall to ₹297-₹295. A further break below ₹295 will see the corrective fall extending to ₹290 and ₹288. On the other hand, if ITC manages to breach ₹303 decisively, it will gain fresh momentum. Such a break can take the stock up to ₹310. Investors can continue to hold the long positions taken at ₹282, ₹278 and ₹272. Retain the stop-loss at ₹273. Revise the stop-loss higher to ₹285 as soon as the stock moves up to ₹299. Book profits are ₹310.

Key resistance ahead for Infosys (₹718.8)

The fall in Infosys paused last week as the stock consolidated above ₹700. The region between ₹729 and ₹730 is a crucial resistance. A strong break and a decisive close above ₹730 will negate the head and shoulder pattern formed on the daily chart. In such a scenario, Infosys will gear up for a fresh rally to ₹760 and ₹770 in the coming weeks. But a failure to breach ₹730 and a pull-back thereafter can drag the stock to ₹710 and ₹700. This will confirm the head and shoulder reversal pattern. In that case, the possibility will be high of the stock breaking below ₹700 and declining to ₹690-685 or even ₹675 — the target level of the reversal pattern. Cluster of supports is poised between ₹690 and ₹675. As such, the pace of fall below ₹700 could be slow and a further fall below ₹675 looks less probable. Medium-term traders can hold the long positions taken 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.

Near-term outlook is unclear for RIL (₹1,322.6)

RIL rallied as expected last week, breaking above the key resistance level of ₹1,320. The stock surged over 7 per cent intra-week and made a new record high of ₹1,361.45. But it reversed lower towards the end of the week, giving back some of the gains, and closed 4.4 per cent higher for the week. Though the broader bullish view remains intact, the near-term outlook is unclear. The price action will need a close watch as to whether RIL manages to sustain above the psychological level of ₹1,300. A decisive break below ₹1,300 can take RIL lower to ₹1,260. But such a fall will be a good buying opportunity from a long-term perspective. If RIL manages to sustain above ₹1,300 and reverses higher, it can revisit ₹1,350-1,360. It will also keep the possibility high of the stock targeting ₹1,400 or even higher levels. 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. Revise the stop-loss higher to ₹1,320 as soon as RIL moves up to ₹1,360.

Tata Steel shows positive bias (₹515.5)

Tata Steel has been stuck in a narrow ₹505-530 range over the last couple of weeks. A breakout on either side of ₹505 or ₹530 will decide the direction of the next move. If Tata Steel breaks below ₹505, a fall to ₹495-490 is possible. The region between ₹495 and ₹490 is a strong support, which can limit the downside. A further fall below ₹490 looks less likely at the moment. On the other hand, if Tata Steel breaks the current sideways range and goes above ₹530, it can move up initially to ₹540. It will also keep the uptrend that has been in place since late January intact. An eventual break above ₹540 will then increase the likelihood of the stock targeting ₹560 levels over the medium term. The bias is positive on the charts. So, the possibility is high of the stock breaking above ₹530. As such, medium-term traders can go long on dips at ₹510 and ₹505. Stop-loss can be placed at ₹485 for the target of ₹555. Revise the stop-loss higher to ₹515 as soon as the stock moves up to the level of ₹525.

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