Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on April 28, 2019 Published on April 28, 2019

SBI (₹312.3)

SBI oscillated between ₹303.5 and ₹315.5 all through last week. The near-term outlook is unclear. A key support is at ₹302 and a significant resistance is at ₹315. The stock can remain range-bound between ₹302 and ₹315 for some time. A breakout on either side of ₹302 or ₹315 will decide the direction of the next move. A strong break below ₹302 will bring renewed pressure on the stock. Such a break will drag the stock lower to ₹295 and ₹293 in the near term. A further break below ₹293 will then increase the likelihood of the fall extending to ₹285. On the other hand, if SBI manages to rise past ₹315 in the coming days, the downside pressure will ease. In such a scenario, the stock can move up to ₹320-₹321 — the next crucial resistance zone. Inability to breach ₹321 can trigger a pull-back move to ₹315 again. But a strong break and a decisive close above ₹321 will boost the bullish momentum and take SBI higher to ₹330-335 levels again. Traders can stay out of the market until a clear trend emerges.

ITC (₹304.65)

ITC was volatile last week. It fell to a low of ₹298.7 initially and reversed sharply higher from there to make a high of ₹309.7 before coming off from there again to close the week on a flat note. The weekly candlestick reflects indecisiveness. A key support is at ₹303. A break below it can take the stock lower to ₹299 — the 21-day moving average support which halted the fall last week. A bounce from there can take ITC higher to ₹305-310 levels again. In such a scenario, the stock can trade sideways between ₹299 and ₹310 for some time. But if ITC declines below ₹299, there is a strong likelihood of it falling to ₹294. A further fall below ₹294 looks unlikely now. On the other hand, the level of ₹310 has been capping the upside over the last two weeks. ITC has to breach the key level of ₹313 decisively to gain fresh bullish momentum. Such a break can take the stock higher to ₹322. A further break above ₹322 will then increase the likelihood of the stock revisiting ₹350 levels over the medium term.

Infosys (₹737.1)

Infosys snapped its two-week fall and reversed higher last week. The stock was up about 3 per cent. The 21-week moving average support at ₹719 has held well and triggered a reversal. Charts suggest a sideways move between ₹705 and ₹775. An intermediate resistance within this range is at ₹741. A strong break above it can take Infosys higher to ₹770 and ₹775 - the upper end of the range. On the other hand, inability to break above ₹741 can drag the stock lower to ₹715 and ₹710. A breakout on either side of ₹705 or ₹775 will decide the direction of the next move. A break below ₹705 can drag the stock initially lower to ₹699. A bounce from ₹699 can trigger a corrective rally to ₹710 and ₹715. But a further break below ₹699 will increase the downside pressure. Such a break will see Infosys tumbling to ₹680 or even lower levels thereafter. However, if Infosys manages to break the range above ₹775, the uptrend will remain intact. Such a break can take the stock higher to ₹785-790.

RIL (₹1,391.45)

RIL inched higher for the second consecutive week. But the stock seems to lack strength. However, the bias remains bullish on the charts. Key supports are at ₹1,359 and ₹1,355, which are likely to limit the downside. A fall below ₹1,355 looks less probable now. As long as the stock remains above these supports, the outlook will be positive. It will also keep the possibility high of the stock breaking above the psychological level of ₹1,400. A break above ₹1,400 will boost the momentum and trigger a fresh rally to ₹1,470. The bullish outlook will get negated if RIL declines below ₹1,355. A break below ₹1,355 can take the stock lower to ₹1,330 and ₹1,320. In such a scenario, RIL can remain range-bound between ₹1,320 and ₹1,400. Traders with a medium-term perspective can make use of dips to go long at ₹1,380 and accumulate at ₹1,370 and ₹1,360. Stop-loss can be placed at ₹1,340 for the target of ₹1,460. Revise the stop-loss higher to ₹1,395 as soon as the stock moves up to ₹1,405.

Tata Steel (₹545)

Tata Steel tumbled over 6 per cent intra-week and made a low of ₹509. However, the stock clawed-back sharply on Friday, recovering the loss and closed marginally higher for the week. The support around ₹510 has held well. Cluster of supports is poised in the ₹540-530 range, which can limit the downside in the near term. As long as the stock trades above this support zone, a rise to ₹560 is possible. Inability to breach ₹560 can drag the stock to ₹540 and ₹530. But a decisive close above ₹560 will boost the bullish momentum and will increase the likelihood of the stock surging to ₹600. The indicator on the chart is positive. The 55-DMA is on the verge of crossing over the 100-DMA. This is a bullish signal, indicating that the downside could be limited. The possibility is high of Tata Steel breaching ₹560 and targeting ₹600.

The writer is a Chief Research Analyst at Kshitij Consultancy Services

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