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

SBI (₹281.4)

Last week, the stock of SBI breached a key resistance around ₹275. But its 200-day moving average and the key resistance at ₹291 limited further rally. The stock gained 4 per cent last week. It is currently testing a crucial resistance in the band between ₹285 and ₹291. The daily relative strength index is displaying a negative divergence, indicating a potential trend reversal. The stock can decline and find support around ₹270 in the coming week. Traders with a short-term view can sell the stock with a stop-loss at ₹286. A decisive fall below the base level of ₹270 will strengthen the downmove and drag the stock lower to ₹260 and ₹255 levels in the short term. On the other hand, a strong breach of the immediate resistance zone between the levels of ₹285 and ₹291 will strengthen the uptrend and push the stock northwards to ₹305 and ₹315 over the same time frame.

ITC (₹324.6)

Following a sharp rebound from the key support level of ₹300, the stock encountered a significant resistance around ₹331 last week. The stock has come off slightly from these resistance levels. The relative strength index in the daily chart is showing a negative divergence and has entered the neutral region from the bullish zone. Any declines can find support around ₹316 initially. Only a strong fall below this level will alter the near-term uptrend and pull the stock down to ₹300 levels. Else, the stock can move sideways between ₹316 and ₹331 for a while. The stock needs to emphatically break the resistance at ₹331 to extend its upmove to ₹345 levels, where the 200-day moving average line is poised. To alter the medium-term downtrend, the stock has to move past the significant resistance level of ₹355. Such a rally can take it higher to ₹370 levels in the medium term.

Infosys (₹1095.6)

The stock of Infosys, despite a choppy trade, advanced 1.6 per cent last week. It has been in a short-term uptrend from the early July low of ₹932 levels. But the stock continues to test its significant intermediate-term resistance at ₹1,100 levels. Only a conclusive break out of this resistance will reinforce the bullish momentum and take the stock northwards to ₹1,122 and then to ₹1,136 in the medium term. Traders with a short-term perspective can consider initiating fresh long position on a rally above ₹1,100 with a stop-loss at ₹1,085. If the stock fails to break the resistance, it will continue to trade sideways between ₹1,060 and ₹1,100. Key supports below ₹1,060 are at ₹1,040 and ₹1,022 levels. A strong decline below ₹1,022 will mar the short-term uptrend and pull the stock down to ₹1,000 and then to ₹986 in the medium term.

RIL (₹984.2)

Last week, the stock of RIL extended its fall and closed well below the key support level of ₹1,000. It has fallen 1.7 per cent. Though the medium-term trend is up, the short-term downtrend is getting stronger. The stock can continue its decline and touch the immediate support level at ₹960 and then the next base level at ₹940 in the short term. However, the medium-term uptrend will be in place as long as the stock trades above ₹940. A decisive fall below this level will mitigate the uptrend and drag the stock down to ₹915 and then to ₹900. Any rally will face resistance at ₹1,000 and then at ₹1,015 levels. A conclusive breakthrough of these resistances is needed to strengthen the medium-term uptrend and take the stock up to the levels of ₹1,050 and then to ₹1,070. Traders with a short-term perspective should tread with caution in the coming week.

Tata Steel (₹262)

Last week, Tata Steel surged almost 6 per cent with good volumes. This upmove was triggered by a positive divergence in the daily relative strength index. To confirm the trend reversal, it is important for the stock to extend its uptrend and show signs of bullishness. An emphatic rally above the immediate resistance at ₹275 can push the stock higher to ₹288 and then to ₹300. Traders with a short-term perspective should tread with caution and initiate fresh long position on a rally above ₹275 with a fixed stop-loss. But, for confirmation of the ongoing rally, the stock needs to decisively move past the resistance level of ₹300. Such a break can take the stock higher to ₹310 and ₹320. However, inability to rally above ₹300 will keep it moving sideways between ₹250 and ₹300. Key supports below are at ₹240 and ₹225.

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