Weekly Trading Guide

SBI reverses lower from a key resistance (298.1)

SBI extended its upmove, as expected, last week to test the key resistance level of ₹305, but failed to sustain higher. The stock made a high of ₹306.3 and reversed sharply lower on Friday, giving back almost all the gains made during the week. An immediate support for the stock is at ₹295. A break below it can drag the stock lower to ₹288 or ₹286. A further fall below ₹286 looks less likely now. An upward reversal from the ₹288-286 support zone can take SBI higher to ₹295 and ₹300 levels again. Such a bounce will be a good opportunity to enter long positions again from a short-term perspective. A strong break and decisive close above ₹305 is needed for SBI to regain strength. Such a break can take the stock initially higher to ₹310 and ₹315 levels. A further break above ₹315 will then increase the likelihood of the stock extending its up-move to the level of ₹320. The region between ₹315 and ₹320 is a crucial medium-term resistance. Whether SBI surpasses this resistance zone or not will decide the direction of the next move.

Supports to limit the downside in ITC (₹297.7)

ITC sustained above its support at ₹288 and rallied over 2 per cent last week. The ₹300-302 resistance zone is capping the upside now. If ITC continues to trade below ₹300, a fall to ₹295 or even ₹290 cannot be ruled out. But a further fall below ₹290 looks less probable as the indicators on the charts are positive. The 21-day moving average has crossed the 200-day moving average — a bullish sign, indicating that the downside could be limited. As such, a bounce from ₹290 can take the stock higher to ₹300 again. In such a scenario, a range-bound move between ₹290 and ₹302 is possible for some time. An eventual decisive break above ₹303 will boost the momentum. Such a break will trigger a fresh rally, targeting ₹310. It will also keep the possibility high of the stock revisiting ₹320 levels over the medium term. Investors can continue to hold the long positions taken at ₹282, ₹278 and ₹272 with a revised stop-loss at ₹285. Move the stop-loss further higher to ₹297 as soon as the stock moves up to ₹303. Book profits at ₹310.

Infosys gears up for a fresh rally (₹742.15)

Infosys surged over 3 per cent last week, breaking above the crucial resistance level of ₹730. The strong rally in the past week indicates the end of the downtrend that has been in place since February. The weekly chart gives an early sign that a fresh leg of upmove could have just begun. This upmove could be strong as Infosys has risen after forming a strong base between ₹700 and ₹720. The short-term outlook is bullish. The ₹730-727 band will now act as a support and can limit the downside. An upmove to ₹750-₹755 is likely in the near term. A strong break and a decisive close above ₹755 will then increase the likelihood of the upmove extending to ₹780. The bullish outlook will get negated only if Infosys declines below ₹725. Such a break, though unlikely, can take the stock lower to ₹710 or ₹700. 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 the level of ₹755.

RIL may dip before going up (₹1,342.1)

RIL surged about 5 per cent intra-week but failed to sustain higher. After making an intra-week high of ₹1,386.6, the stock gave back most of the gains and closed 1.5 per cent higher for the week. A near-term support is at ₹1,316. As long as RIL trades below ₹1,350, a dip to test ₹1,316 cannot be ruled out. A break below ₹1,316 can drag RIL further lower to ₹1,300 or ₹1,290. A further fall below ₹1,290 looks less likely as fresh buyers are likely to emerge at lower levels and limit the downside. A bounce from ₹1,316 or the ₹1,300-₹1,290 support zone can take the stock higher to ₹1,350. A further break above ₹1,350 will then increase the likelihood of the stock targeting ₹1,380 and ₹1,400 levels thereafter. The bullish outlook will get negated if RIL declines decisively below ₹1,290. In such a scenario, RIL can fall to ₹1,250. Investors can hold the long positions taken at ₹1,260, ₹1,245 and ₹1,225 with a revised stop-loss at ₹1,320. Move the stop-loss further higher to ₹1,345 as soon as RIL touches the level of ₹1,375. Book profits at ₹1,420.

Tata Steel has a bullish bias (₹518.1)

Tata Steel continued to consolidate for the third consecutive week. The stock has been stuck in a narrow range between ₹505 and ₹532. A breakout on either side of ₹505 or ₹532 will determine the next move. The price action on the chart leaves the bias bullish. The stock is holding well above the 100-day moving average. Additionally, the 21-day moving average has just crossed over the 100-day moving average. This is a bullish signal, indicating that the downside could be limited. It also increases the possibility of the stock breaking the current range of ₹505-532 on the upper side. The ensuing target is ₹540. A further break above ₹540 will increase the likelihood of the stock targeting ₹560. But if Tata Steel declines below ₹505, it can fall to ₹495 or ₹490. Medium-term traders with high-risk appetite can go long at current levels and accumulate on dips at ₹512 and ₹505. Stop-loss can be placed at ₹487 for the target of ₹555. Revise the stop-loss higher to ₹515 as soon as the stock moves up to ₹525.

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