Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on February 16, 2018 Published on February 11, 2018

SBI (₹296.4)

SBI was volatile last week. The stock fell to a low of ₹283.1 initially, then clawed back from there to a high of ₹308.5 and came-off giving back some of the gains and close the week on a flat note. The 61.8 per cent Fibonacci retracement support at ₹283 has held well. Immediate supports are at ₹294 and ₹290.

If SBI sustains above these supports, the downside pressure may ease for some time in the near-term. In such a scenario, an intermediate upmove to ₹310 and ₹315 is possible. But upside is expected to be restricted to the ₹315-₹316 resistance zone. Fresh sellers are expected to emerge at higher levels. As such the stock is likely to reverse lower from the ₹315-₹316 zone and can fall again towards ₹295 and ₹290. A break below ₹290 can take the stock further lower to ₹283 and ₹280. The stock will come under more selling pressure if it breaks below ₹280. Such a break will increase the likelihood of the stock tumbling to ₹263 and ₹260. Traders who had taken short positions last week on rallies can hold it. Retain the stop-loss at ₹319.

ITC (₹271.3)

ITC fell 1.5 per cent last week. Though the broader indices have tumbled about 6 per cent in the last two weeks, the fall in ITC has been lower. This reflects the inherent strength in the stock which leaves the overall bullish outlook intact. Since the overall market sentiment is negative, ITC can fall towards ₹265 or ₹260 in the short term along with the broader indices. As mentioned last week, cluster of supports inbetween ₹265 and ₹260 and a strong trend line support at ₹257 can limit the downside. An upward reversal from this support region can take ITC higher to ₹275 and ₹280. A range-bound move between ₹257 and ₹285 is likely for some time. The bias continues to remain bullish for the stock to break and rally beyond ₹285 over the medium term. But if ITC declines below ₹257, it can come under renewed pressure. In such a scenario, the possibility of the stock falling towards ₹245 will increase. However, such a fall will be a good buying opportunity. Investors can hold the long positions and accumulate at ₹260. Retain the stop-loss at ₹220.

Infosys (₹1,111.8)

Infosys extended its fall for the second consecutive week. The stock tumbled 2.6 per cent in the past week. The short-term outlook is bearish. The 21-day moving average at ₹1,137 will now act as a strong near-term resistance. The next key resistance is at ₹1,160. These resistances can cap the upside in the stock in the short term. As long as the stock remains below this resistance, the corrective fall that has been in place over the last two weeks can continue. A fall to ₹1,085 or ₹1,080 looks likely in the coming days. The region between ₹1,085 and ₹1,080 is a key support zone. An upward reversal from this support region towards ₹1,100 cannot be ruled out. But a break below ₹1,080 will increase the likelihood of the stock tumbling to ₹1,050 or ₹1,030. But a further fall below ₹1,030 looks less probable now as investors who have missed the recent rally in Infosys are likely to enter the market at lower levels. Long-term investors can hold the long positions. Medium-term investors who have bought at ₹1,130 and ₹1,100 can accumulate at ₹1,085.

RIL (₹897.9)

RIL fell sharply initially in the past week breaking below ₹900. Though it managed to reverse higher after making a low of ₹872.1, the bounce-back move lacked momentum. The 100-day moving average resistance at ₹907 restricted the upside and the stock has come-off after making a high of ₹910. Resistance is inbetween ₹907 and ₹910. As long as the stock remains below ₹910, it can remain under pressure. Though there is a key support in the ₹890-₹885 region, RIL looks vulnerable to fall below ₹885. Such a fall can increase the downside pressure and drag RIL lower to ₹845 in the short term on the back of profit-booking. The level of ₹845 is a key medium-term support. If RIL manages to bounce from this support, a relief rally to ₹900 can be seen. But a strong fall below ₹845 will increase the likelihood of the stock tumbling to ₹800 over the medium term. High-risk appetite traders can make use of rallies to go short at ₹905 and ₹910. Keep the stop-loss at ₹930 for the target of ₹850. Revise the stop-loss lower to ₹895 as soon as the stock moves down to ₹880.

Tata Steel (₹683.6)

Tata Steel has managed to remain insulated from the strong sell-off witnessed in the broader markets. Though the stock tumbled over 5 per cent intraweek, it managed to reverse higher from the low of ₹634.4, recovering all the loss made and closed with over 2 per cent gains for the week. Immediate support is at ₹678 and the next key support is at ₹665. If the stock manages to sustain above ₹665, an upmove to ₹710 is possible. Inability to break above ₹710 and a downward reversal thereafter will increase the likelihood of the stock falling back to ₹670 and ₹650 levels again. But a strong break above ₹710, though less likely at the moment, will see Tata Steel revisiting ₹750 levels going forward. Investors can hold the long positions and retain the stop-loss at ₹630. Short-term traders, on the other hand, can make use of rallies to go short at ₹700 and ₹710. Stop-loss can be placed at ₹730 for the target of ₹650. Revise the stop-loss lower to ₹695 as soon as the stock moves down to ₹680.

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