High Five: SBI, ITC, Infosys, Reliance Ind, Tata Steel

SBI still tests its key resistance level

Following an initial slip, the stock of SBI found support at around ₹255 and bounced back last week. But the stock tests a key resistance at ₹270; the 50-day moving average is also poised around this level. A decisive rally above this resistance area will strengthen the bullish momentum and take the stock higher to ₹280 and then to the upper boundary of the sideways range at ₹290 levels in the short term. Such a rally will sustain the stock’s medium-term consolidation in a broad band between ₹258 and ₹290. Traders with a short-term outlook can go long above ₹270 levels with a fixed stop-loss. Declines, if any, can find support in the base zone of ₹258- ₹260. A strong tumble below ₹258 levels will pull the stock down to ₹250 and then to ₹241 in the short term. Next support is pegged at ₹234.

The resistance at ₹318 checks ITC

In the midst of volatility, the stock surged 2.3 per cent last week. The stock continues to test the significant resistance at ₹318 as well as its 50-day moving average. On the other hand, it has an important support at the level of ₹300. As long as the stock trades in the range between ₹300 and ₹318, traders with a short-term view should tread with caution. The indicators and oscillators in the daily chart are showing mixed signs. An emphatic breakthrough of ₹318 can reinforce bullish momentum and take the stock higher to ₹331. In that case, traders can consider buying the stock with a tight stop-loss. Next crucial resistances for the stock are placed at ₹342 and ₹350. Only a further rally beyond ₹350 will alter the stock’s medium-term downtrend. Conversely, a fall below ₹300 can drag the stock to ₹285 and ₹273 in the short term.

Infosys moves with negative bias

Last week, the stock slipped 1.6 per cent within its broad sideways range between ₹970 and ₹1,025. Since recording a new high at ₹1067, the stock has been on a medium-term downtrend. A decisive fall below the lower boundary at ₹970 can strengthen the downtrend and pull it down to ₹950. Subsequent supports are at ₹935 and ₹910 levels. On the other hand, conclusive rally above the key resistance as well as the 200-day moving average around ₹1,025 can alter the stock's sideways movement. But, to alter the downtrend, the stock needs to rally above ₹1,050 initially and then ₹1,070. Indicators project mixed signals. Hence, traders with a short-term view should tread with caution and initiate fresh short position on a fall below ₹970. Investors with a medium-term horizon should stay away from the stock for the time being.

RIL continues to test its key resistance

Last week, the stock ended on a positive note closing above the key medium-term resistance level at ₹1,000. But the stock continues to test this resistance. Moreover, the daily relative strength index displays a negative divergence implying that a near-term trend reversal is possible. The daily price rate of change indicator also shows negative divergence and is on the brink of entering the negative territory. To negate this reversal, the stock needs to emphatically rally above the next resistance level of ₹1,026. Such a rally can push the stock further to ₹1,050. Traders with a short-term view must be cautious and consider initiating fresh long position on a strong rally above ₹1,026. Next resistance is at ₹1,080. However, a decisive fall below the key immediate support of ₹980 will confirm that the stock’s near-term trend has reversed down and can pull the stock down to ₹960 .

Tata Steel moves in a narrow range

The stock of Tata Steel was choppy and managed to close on a positive note by advancing one per cent last week. For the past four weeks, the stock has been moving sideways in a narrow range between ₹291 and ₹316 levels. The stock is in a downtrend across all time-frames. It hovers well below its 50- and 200-day moving averages. A fall below ₹291 can strengthen the downtrend and drag the stock down to ₹280 and ₹271 in the ensuing weeks. Traders with a short-term perspective can initiate short position with a stop-loss at ₹310. A conclusive rally above ₹316 will reverse this short-term view and take the stock upwards to ₹330 levels. Next significant resistances to note are placed at ₹340 and ₹350 levels. To alter the short-term downtrend, the stock needs to rally beyond ₹350 to test next resistances at ₹370 and ₹384 levels.

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