Weekly Trading Guide

Downtrend pauses in SBI (₹256.6)

The downtrend in SBI that has been in place over the last two months paused last week. SBI consolidated in a sideways range between ₹249 and ₹258. Immediate support is at ₹249 and the next key support is in the ₹246-₹244 region. Resistances are at ₹260 and ₹263, which are likely to be tested as long as the stock sustains above ₹249. A strong break and decisive close above ₹263 can trigger a corrective rally to ₹274 in the short term. Further break above ₹274 will see the upmove extending to ₹278. The upside is expected to be capped at ₹274 or ₹278 at the moment. On the other hand, if SBI breaks below ₹249, it can dip to test the crucial ₹246-₹244 support zone. The stock may come under renewed selling pressure if it declines below ₹244 decisively. Such a break can drag SBI lower to ₹237 or ₹232. As mentioned last week, the price action around ₹232 will need a close watch. Further fall below ₹232 will increase the likelihood of the stock tumbling to ₹200 or ₹190 over the medium to long-term.

Corrective rally likely in ITC (₹266)

ITC bounced back and closed 3 per cent higher last week. It tested the key resistance level of ₹270 and has come-off slightly from there. The inability to break above ₹270 can drag the stock lower to ₹257 again. A range-bound move between ₹257 and ₹270 can be seen for a while in that case. A breakout on either side of ₹257 or ₹270 will then determine the next move. A break below ₹257 can take the stock lower to ₹249. The level of ₹249 is a strong support as both the 100-week moving average as well as trendline are poised around this level. As such, further fall below ₹249 is less likely. On the other hand, if ITC manages to breach above ₹270, the downside pressure can ease. Such a break will pave way for a corrective rally to ₹285 on the back of short-covering. Medium-term traders can hold the long-positions with a revised stop-loss at ₹262. Move the stop-loss further higher to ₹269 as soon as the stock moves up to ₹275. Book profits at ₹280.

Short-term view positive for Infosys (₹919.4)

Infosys has reversed higher from its low of ₹897.45 in the past week. Though there is a resistance near current levels around ₹920, there is high possibility of the stock breaching it in the coming days. Price action on the chart signals that the stock is gaining strength and is more likely to sustain above the ₹910-₹900 support zone. Intermediate dips to ₹910 may find fresh buyers coming into the market. A rally to ₹935 or even ₹945 is possible in the short term. If Infosys manages to breach above ₹945, the upmove can extend to ₹960 or ₹970 levels. On the other hand, if the stock fails to break above ₹920 this week, it can test the support at ₹910 initially. A break below ₹910 can take the stock further lower to ₹900 or ₹895. The level of ₹895 is a crucial short-term support. The stock will come under renewed selling pressure if it declines below this support. Such a break below ₹895 will increase the possibility of the stock tumbling to ₹865 levels again. Investors can hold the long positions.

Short-term outlook turns bullish for RIL (₹836.8)

After falling for two weeks, RIL surged 7 per cent last week, breaking above the key resistance level of ₹800. Immediate support is at ₹832 and the next key support is at ₹823. The outlook will turn negative only if the stock declines below ₹823. In such a scenario, a fall to ₹800 is possible initially. Further break below ₹800 will increase the likelihood of the stock extending its fall to ₹773. The outlook will remain positive as long as RIL sustains above ₹823 and a rally to tests the ₹880-₹885 resistance zone is possible. Whether the stock breaks above this resistance zone or not will decide the next trend. Inability to break above ₹885 can trigger a pull-back move to ₹850 and ₹830 again. But a strong break above ₹885 will pave way for the next targets of ₹900 and ₹915. Short-term traders with high risk appetite can go long at current levels and accumulate at ₹830 and ₹825. Keep the stop-loss at ₹816 for the target of ₹875. Revise the stop-loss higher to ₹845 as soon as the stock moves up to ₹860.

Key resistance ahead for Tata Steel (₹691.4)

Contrary to an expected fall, Tata Steel surged last week. After having stuck in a narrow range below the 21-day moving average resistance almost all through the week, Tata Steel surged breaking this hurdle on Friday. Strong quarterly sales number triggered this rally and aided the stock to close over 6 per cent higher. The crucial resistance level of ₹700 is likely to be tested. Whether the stock manages to break above this hurdle or not will decide the next move. Inability to break above ₹700 and a subsequent pull-back move can drag the stock lower to ₹670 or ₹665. Further break below ₹665 will increase the likelihood of the fall extending to ₹660 and ₹655. On the other hand, if Tata Steel manages to surpass the hurdle of ₹700, it can gain momentum. Such a break will pave way for the next targets of ₹715 and ₹730. Traders can stay out and watch the price action to get a clear cue on the next trade signal. Stop-loss has been hit on the short positions recommended last week.

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