Weekly Trading Guide

SBI (₹295.9)

Near-term view is positive for SBI

SBI surged last week breaking above a key near-term resistance at ₹290. Though the stock fell-back from the intra-week high of ₹304.9, the level of ₹290 may provide support. The stock islikely to sustain above ₹290 in the coming days. But in case it declines below ₹290, it can fall to ₹280. The region around ₹280 is a strong support and a further fall below this level is unlikely. As long as the stock sustains above ₹290, a rise to test the next key resistances at ₹303 and ₹308 is possible. Inability to break above ₹308 can keep the stock in a sideways range between ₹290 and ₹308 for some time. The broader view remains bullish and an eventual break above ₹308 can take SBI higher to ₹327 and ₹330 in the coming weeks. The ₹327-₹330 region is a crucial long-term resistance and what happens after testing this hurdle will decide the next move. Investors can hold the long positions. Retain the stop-loss at ₹230 and revise it higher ₹260 as soon as the stock rises to ₹315. Book partial profits on about 25 per cent of the holdings at ₹325.

ITC (₹277)

Immediate outlook is unclear for ITC

ITC traded in a narrow range between ₹275 and ₹282 last week. Though the weekly chart leaves a mixed outlook for the stock, the daily chart suggests that a fall to ₹270 is possible. The immediate outlook is not clear. The level of ₹270 is a key short-term support. A break below this support may bring the stock under pressure for a further fall to ₹263. On the other hand, if ITC sustains above ₹270 and moves higher, a rise to ₹280 and ₹285 is possible once again. The level of ₹285 is a key short-term resistance. A strong and a decisive daily close above this hurdle is needed for the stock to gain fresh momentum. Such a break will increase the likelihood of the stock rallying to ₹300. As being reiterated in this column, the region around ₹300 is a crucial long-term trend resistance. The price action after testing this resistance will be key in deciding the next trend. A pull-back from ₹300 can take it to ₹290. But a strong rise past ₹300 will increase the possibility of the stock surging to ₹330 or even ₹340 thereafter.

Infosys (₹931.5)

Infosys gives a sign of breather

Infosys has managed to sustain above the crucial ₹900 support, though in a narrow range, for the third consecutive week. Also, the slight 1.3 per cent bounce-back witnessed last week is giving it a breather and leaves the outlook unchanged. The prolonged ₹900-₹1,045 sideways move that has been in place since November 2016 remains intact. Within this range, there is a strong likelihood of seeing a rally to ₹980-₹990 in the short term. A break above the 21-day moving average resistance at ₹940 will pave way for this initial up-move. Further break above ₹990 will take Infosys to ₹1,045 — the upper end of the range thereafter. As mentioned last week, Infosys might now need a strong and fresh trigger to drag it below ₹900. The support at ₹880 can be tested initially on a break below ₹900. Further fall below ₹880 will increase the likelihood of the fall extending to ₹815 or ₹800. Such a fall below ₹900, if seen, will be a good opportunity for the accumulating or entering fresh long positions. Investors can hold the long positions and accumulate at ₹910 and at ₹850 if the stock breaks and falls below ₹900.

RIL (₹1,328.6)

RIL is on a corrective decline

RIL tumbled 4.7 per cent last week breaking below the intermediate support at ₹1,345. This sharp fall has also wiped out almost all the gains made last month in just one week. It also signals the beginning of a corrective fall. Technically, this corrective fall is much needed for the stock now as it had skyrocketed over 40 per cent in just three months. The level of ₹1,345 may now act as a good near-term resistance. However, below this resistance, there is a strong likelihood of the stock falling to ₹1,300, ₹1,295 or ₹1,290 in the coming days. The presence of two trendlines and a Fibonacci retracement support makes this ₹1,300-₹1,290 range, a strong short-term support zone. At the moment, further fall below ₹1,290 looks less probable. An eventual bounce from this ₹1,300-₹1,290 support zone can take RIL higher to ₹1,345 and ₹1,350 once again. Inability to break above ₹1,350 can keep the stock in a sideways range between ₹1,290 and ₹1,350 for some time. But a strong break and a decisive weekly close above ₹1,350 would ease the downside pressure and pave way for a revisit of ₹1,400 and ₹1,450. Investors can continue to hold the long positions. Retain the stop-loss at ₹1,215.

Tata Steel (₹433)

Tata Steel hovers above key supports

Tata Steel fell 3.5 per cent last week. The stock has been falling continuously over the last four weeks and has plummeted about 14 per cent over this period. This gives an initial signal that the strong uptrend that has been in place since February 2016 is getting reversed. The stock now hovers above very crucial trend-deciding supports poised at ₹430 and ₹422 — the 200-day moving average level. A strong break and a decisive close below ₹422 will confirm that the trend has reversed. Such a break can bring Tata Steel under pressure and drag it to ₹405 or ₹395 — the 38.2 per cent Fibonacci retracement support level. So, investors holding long positions should tread with caution. Exit the long positions at ₹415. On the other hand, if Tata Steel manages to sustain above ₹422 and reverses higher, it can rise to ₹445. Such a bounce can give some relief for the stock. Inability to break above ₹445 may keep the stock range-bound between ₹422 and ₹445 for some time. But a break strong above ₹445 will see the up-move extending to ₹460

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