Weekly Trading Guide

SBI (320.8)

The uptrend in SBI is gaining momentum. The stock surged 7.6 per cent last week, breaking above the key resistance level of ₹305. Resistance is near current levels at around ₹321. A pull-back from that can trigger a corrective fall to ₹315. A break below ₹315 can drag the stock lower to ₹305. However, the bias continues to remain positive. So, a further fall below ₹305 looks less probable. A bounce from ₹305 will have the potential to take the stock above ₹321. In such a scenario, a rally to ₹350 is likely. The indicators on the charts are positive. The 21-day moving average has crossed over the 55-, 100- and 200-day moving averages. This is a strong bullish sign, indicating that the downside could be limited and the uptrend is likely to remain in place. Short-term traders can wait for dips and go long at ₹315 and accumulate at ₹308. Stop-loss can be placed at ₹295 for the target of ₹350. Revise the stop-loss to ₹325 as soon as the stock moves up to ₹335.

ITC (296.7)

ITC was volatile last week. The stock fell initially to a low of ₹291.2 and bounced back to make a high of ₹302.95. However, it fell in the final trading session of the week, giving back all the gains and closed on a flat note. The resistance at ₹302 is holding well. ITC has to make a decisive close above this hurdle to regain strength and move higher. The next target is ₹309. The level of ₹309 is a key long-term trend resistance. Inability to rise past this level can trigger a corrective fall to ₹302 or ₹300. But a strong break above ₹309 will increase the likelihood of the rally extending to ₹320 and ₹322 over the medium term. On the other hand, if ITC continues to trade below ₹302, a dip to ₹293 or ₹290 is possible. Investors can continue to hold the long positions taken at ₹282, ₹278 and ₹272 with a revised stop-loss at ₹289. Move the stop-loss further higher to ₹301 as soon as the stock moves up to ₹305. Book profits at ₹310.

Infosys (₹742.3)

Infosys tumbled 3 per cent intraweek and made a low of ₹719.6. However, the stock reversed sharply higher recovering all the loss. The bias remains positive on the chart. The 21-day moving average at ₹726 is a key support. The quick bounce from ₹719 indicates that the stock is getting fresh buyers below ₹726. So as long as the stock trades above the 21-day moving average support, there is a strong likelihood of it moving higher to ₹750-₹755. A further break above ₹755 will then increase the likelihood of the uptrend extending to ₹780. The short-term outlook will turn negative only if Infosys makes a decisive close below the 21-day moving average. A fall to ₹705 or ₹700 is possible. A further fall below ₹700 looks less probable at the moment. Medium-term traders can hold the long positions taken at ₹725, ₹720 and ₹715. Retain the stop-loss at ₹680 for the target of ₹790. Revise the stop-loss to ₹735 as the stock moves up to ₹755.

RIL (₹1,363)

RIL opened the week with a gap-down and fell to a low of ₹1,317.15. However, the negative sentiment was short-lived and RIL clawed back, recovering all the loss and closed 1.5 per cent higher for the week. The support at ₹1,316 mentioned last week has held very well. This leaves the bullish outlook intact. A near-term resistance is at ₹1,385, which is likely to be tested in the coming days. Inability to breach this hurdle can drag the stock lower to ₹1,350 initially. A further break below ₹1,350 will then increase the likelihood of the downmove extending to ₹1,315 or ₹1,310. But, if RIL manages to break above ₹1,385, it can gain fresh strength. In such a scenario, RIL can surge to ₹1,400. A strong break above ₹1,400 will be very bullish from a long-term perspective. This will pave way for ₹1,450 and ₹1,500 over the long term. The outlook for the stock will turn negative only if RIL declines below ₹1,300. Such a break can trigger a corrective fall to ₹1,260 and ₹1,250.

Tata Steel (₹520.8)

Tata Steel continued to consolidate for the fourth consecutive week. The stock has been stuck between ₹505 and ₹532. A breakout on either side of ₹505 or ₹532 will decide the next move. If Tata Steel breaks the range below ₹505, it can fall to ₹495 or ₹490. But such a fall looks less likely as the price action on the chart leaves the possibility high of the stock breaking above ₹532. The stock is well above the 21-week moving average level of ₹507. As long as it trades above this support, the bias will remain positive. A strong break above ₹532 will take Tata Steel to ₹540. A further break above ₹540 will then increase the likelihood of the stock targeting ₹560 over the medium term. Traders can hold the long positions taken at ₹518 and ₹512. Retain the stop-loss at ₹487 for the target of ₹555. Revise the stop-loss to ₹515 on a rally to ₹525.

The writer is Chief Research Analyst at Kshitij Consultancy Services

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