Weekly Trading Guide

SBI (₹288.4)

SBI hovers above crucial supports

Contrary to an expected rise above ₹314, SBI tanked over 8 per cent intra-week to make a low of ₹281.9 last week. Though the stock managed to bounce slightly from the low, the price action suggests that it lacks strength. Resistance is at ₹295 which must be breached for the downside pressure to ease. While below this hurdle, a dip to test the ₹280-₹277 support zone is likely in the coming week. But further fall below ₹277 looks less probable. Such a fall below ₹277 though can drag SBI to ₹265 or even lower levels. Having said that, an upward reversal from there can take the stock higher to ₹285 and ₹290 levels once again and will keep the overall uptrend intact. As mentioned, a strong break ₹295 is needed for the stock to gain fresh momentum. Such a break will see a rally to ₹310 and ₹315 levels again. Further decisive break above ₹315 will pave way for the next targets of ₹327 and ₹330. Investors can hold the long positions with a stop-loss at ₹270. Book partial profits on around 25 per cent of your holding at ₹325 and then move the stop-loss higher to ₹280 on the rest.

ITC (₹308.7)

Uptrend gains momentum in ITC

ITC extended its rally for the second consecutive week. The stock surged 8 per cent last week breaking above a key long-term resistance at ₹300. With this break, the uptrend has gained strength. The region between ₹300 and ₹290 will now serve as a strong support. A fall below ₹290 is unlikely as the stock has formed a strong base between ₹270 and ₹290 for more than two months before surging in the last two weeks. So, intraweek dips to the ₹300-₹290 support region is more likely to find fresh buyers coming into the market. A rise to ₹335 or ₹340 is possible in the coming days. An intermediate pull back move to ₹320 cannot be ruled out after testing the ₹335-₹340 target zone. But an eventual break above ₹340 will see the rally extending to ₹350 or even higher levels thereafter. Investors can hold long positions taken last week. Retain the stop-loss at ₹255 for the target of ₹330. Revise the stop-loss higher to ₹290 as soon as the stock moves up to ₹320. The outlook will turn negative only if the stock declines below ₹290; it can then further fall to ₹280 and ₹270.

Infosys (₹996.2)

Infosys can test a key resistance

Infosys rose 4 per cent last week. The up-move that had begun from around ₹900 is gaining strength. Supports are at ₹975 and ₹968 which are likely to limit the downside in the coming days. A rise to ₹1,020 is possible this week. A strong break above ₹1,020 will see the upmove extending to ₹1,040 and ₹1,045 thereafter. Whether the stock breaks above ₹1,045 or not will decide the next move. A downward reversal from ₹1,045 can drag the stock to ₹1,000 levels once again. Such a pull back move will indicate that the broader ₹900-1,045 sideways range that has been in place since November 2016 is still intact. But a strong break and a decisive daily close above the ₹1,045 level will mark the end of this prolonged consolidation and will also indicate that a fresh leg of upmove has begun. In such a scenario, a rise to test the next key resistance at ₹1,075 is possible. Further decisive break and weekly close above ₹1,075 will confirm the trend reversal and pave way for a revisit of ₹1,200 and ₹1,250 levels thereafter. Investors can hold the long positions.

RIL (₹1,335.8)

Downside pressure eases on RIL

RIL fell initially last week to test the psychological ₹1,300 level as expected. However, the stock reversed higher sharply after making an intra-week low of ₹1,295, signalling the absence of fresh sellers to drag it decisively below ₹1,300. The stock will come under renewed pressure only if it falls below the Fibonacci retracement support at ₹1,293. The next key supports poised at ₹1,270 and ₹1,260 can be tested if the stock declines below ₹1,293. But such a fall looks less probable at the moment. Immediate resistance is at ₹1,344 — the 21-day moving average. A strong break above it can take RIL up to ₹1,365 or even ₹1,375. Inability to break above ₹1,375 can keep the stock range-bound between ₹1,300 and ₹1,375 for some time. A strong break and a decisive weekly close above ₹1,375 will signal the end of the corrective fall that has been in place since the last week of April. Such a break will increase the likelihood of the stock rallying to ₹1,425 or even higher levels. Investors can hold the long positions and retain the stop-loss at the level of ₹1,215.

Tata Steel (₹511.8)

Tata Steel is on a strong footing

Tata Steel was stuck inbetween ₹480 and ₹490 for most part of last week. However, the stock skyrocketed over 5 per cent, breaking above the psychological ₹500 mark on Friday to close on a strong note for the second consecutive week. The overall uptrend is intact. Strong support is in the ₹500-₹495 zone, which is likely to limit the downside in the near term. Dips to this support zone may find fresh buyers coming into the market. While above ₹495, a rise to ₹535 is likely. As being reiterated in this column, the level of ₹535 is a crucial long-term trend resistance for the stock. What happens after testing this hurdle will decide the next move for Tata Steel. So, the price action in the coming weeks will need a close watch. Investors holding long positions can revise the stop-loss higher to ₹425. Book partial profits on 20 per cent of your holdings at ₹535 and move the stop-loss higher to ₹460 for the rest. The near-term view will turn negative for a fall to ₹465 or ₹460 only if the stock declines below ₹475.

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