Weekly Trading Guide

SBI (262.9)

SBI plummeted 7.7 per cent last week, breaking below the key support level of ₹275. Next key support is in the ₹259-258 region, which is likely to be tested in the near term. Whether the contract manages to reverse higher from this support zone or not will determine the direction of the next move. A bounce from the ₹259-₹258 support zone will trigger a corrective rally to ₹277 or ₹282. However, the broader sentiment will continue to remain negative. As such, the upside is likely to be capped. The indicators on the charts are also negative. The 21-day moving average is on the verge of going below the 100-day moving average. This is a negative signal, indicating that the upside could be limited. As such, an eventual break below ₹258 can take SBI lower to ₹254. A further break below ₹254 will drag the stock lower to ₹240. Traders can wait for a rise and go short at ₹273 and ₹279. Stop-loss can be placed at ₹288 for the target of ₹243. Revise the stop-loss lower to ₹270 as soon as the stock moves down to ₹267.

ITC (₹279.6)

ITC slumped to a low of ₹268.5 initially on Monday last week, but bounced immediately and traded within its ₹273-284 sideways range for the rest of the week. The near-term outlook is unclear. The stock can remain range-bound between ₹273 and ₹284 for some more time. A breakout on either side of ₹273 or ₹284 will then decide the direction of the next move. A strong break and a decisive close below ₹273 will turn the outlook negative and drag the stock lower to ₹264. On the other hand, if ITC manages to breach above ₹284, it can gain fresh momentum. In such a scenario, the stock can initially move up to ₹289. A further break above ₹289 will then increase the likelihood of the stock targeting ₹301. The sharp bounce from ₹268.5 last week indicates that the stock is getting fresh buyers at lower levels. This keeps the bias positive and the possibility high of the stock breaking the ₹273-284 range on the upside above ₹284 in the coming days. Investors can hold the long positions taken at ₹282, ₹278 and ₹272. Retain the stop-loss at ₹262.

Infosys (₹741.7)

The short-term uptrend in Infosys that has been in place since late December 2018 ended last week. The stock fell 2.4 per cent and closed well below the key 21-day moving average support level of ₹745. As long as Infosys trades below ₹750, the outlook will be negative and a fall to ₹720 is possible. A further break below ₹720 can pull the stock lower to ₹710 and ₹700 over the short term. The region between ₹710 and ₹700 is a strong short-term support for the stock. As such, a fall breaking below ₹700 is unlikely. Dips to the ₹710-700 support is a good buying opportunity. An upward reversal from this support zone will take Infosys initially towards ₹745 and ₹750. An eventual break above ₹750 will then increase the likelihood of the stock targeting ₹770 and ₹790. Traders with a medium-term perspective can make use of dips to go long at ₹720. Accumulate longs at ₹715 and ₹710. Stop-loss can be placed at ₹680 for the target of ₹790. Revise the stop-loss higher to ₹735 as soon as it moves up to ₹755.

RIL (₹1,243.5)

RIL fell over 2 per cent, breaking below the ₹1,260-1,255 support zone last week. The stock made a low of ₹1,215 and has bounced slightly from there towards the end of the week. Inability to breach ₹1,260 can keep the stock under pressure in the near term. An immediate support is at ₹1,223. A break below it can take RIL lower to ₹1,200. Whether RIL manages to bounce from ₹1,200 or not will be key in deciding the direction of the next move. A bounce from ₹1,200 will ease the downside pressure and take the stock higher to ₹1,250 and ₹1,260. A strong break and a decisive close above ₹1,260 will then increase the likelihood of the stock targeting ₹1,300 and ₹1,320. On the other hand, if RIL breaks below ₹1,200, it can fall to ₹1,165 or even ₹1,145. But such a strong fall breaking below ₹1,200 looks less likely as fresh buyers are likely to come at lower levels and limit the downside. Investors can hold the long positions taken at ₹1,260, ₹1,245 and ₹1,225. Retain the stop-loss at ₹1,180 for the target of ₹1,420.

Tata Steel (₹467.4)

Tata Steel rose to a high of ₹496.95, but failed to sustain the momentum. The stock reversed sharply lower from this high, wiping out all the gains made during the week and closed slightly in the red. The 55-day moving average resistance at ₹492 has held very well and has triggered this reversal. The weekly candlesticks give a mixed outlook, but the daily chart looks bearish. The price action over the last couple of weeks indicates that the stock is getting fresh selling pressure at higher levels in the ₹490-500 region. An immediate support is at ₹460. A break below it can drag the stock lower to ₹450 and ₹440. If Tata Steel manages to sustain above ₹440, a range-bound move between ₹440 and ₹500 is possible. But the stock will come under renewed pressure if it declines decisively below ₹440. In such a scenario, Tata Steel can fall to ₹400.The stock will get breather only if it breaches above ₹495 decisively. A relief rally to ₹510 and ₹520 is possible. But such a strong up-move looks unlikely now.

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