Weekly Trading Guide

SBI likely to fall on profit-booking (₹310.9)

The Centre’s recapitalisation plan triggered a sharp upmove in SBI last week. The stock was up a whopping 45 per cent intraday and tested the 2010 high of ₹351.5. But the stock lost some of its gains and is up 28 per cent for the week. The short positions recommended last week were squeezed out, amid the sharp rally. Resistance is in between ₹315 and ₹316. A strong break above ₹316 can take the stock higher to ₹326 . The stock will regain bullish momentum only if it breaches above ₹326 decisively. A revisit of ₹350 levels is possible in such a scenario. But a pull-back from ₹326 can take SBI lower to ₹316 again. On the other hand, if SBI fails to break above ₹316 in the coming days, it will increase the possibility of the stock losing more of the gains made last week on the back of profit-booking. In such a scenario, there is a strong likelihood of the stock breaking below ₹300 and falling to ₹285 in the short term. Further break below ₹285 can drag the stock lower to ₹280 or ₹278 — the crucial 21-week moving average support level.

Supports may limit the downside in ITC (₹269.3)

ITC spiked to an intra-week high of ₹276.1, but fell back to close the week on a flat note. Immediate supports are at ₹267.5 and ₹266 — the 21-day moving average. As long as the stock stays above these supports, it can rise to revisit the near-term resistance level of ₹276. A strong break and a decisive close above ₹276 can ease the downside pressure and take the stock higher to ₹281 initially. Further break above ₹281 will increase the likelihood of the upmove extending to ₹287. Short-term traders can make use of dips and go long at ₹268. Accumulate longs at ₹266.5. Stop-loss can be placed at ₹262 for the target of ₹280. Revise the stop-loss higher to ₹271 as soon as the stock moves up to ₹275. The near-term view will turn negative if the stock breaks below ₹266 . The next target is ₹263. An upward reversal from there can keep the stock range-bound between ₹263 and ₹270 for some time. But a break and decisive close below ₹263 may bring back renewed pressure and drag the stock lower to ₹257.

Short-term outlook positive for Infosys (₹947.4)

Infosys managed to claw back after falling to an intra-week low of ₹915.25. The stock closed over 2 per cent for the week. The 200-day moving average resistance at ₹957 is capping the upside at the moment. However, the outlook continues to remain bullish. Cluster of supports in between ₹945 and ₹940 may prevent any sharp fall in the near term. An eventual break above ₹957 can take the stock higher to ₹980 or ₹985 initially. Further break above ₹985 will ease the downside pressure and pave way for the next target of ₹1,010 or even ₹1,020 and ₹1,030. The region between ₹1,030 and ₹1,040 is a crucial trend-deciding medium-term resistance region. Inability to break above this resistance zone can drag Infosys to ₹1,000 or even lower. The near-term view will turn negative if the stock breaks below ₹915. Such a break can take it to the key short-term support level of ₹916. A strong break and a decisive close below ₹906 will then increase the likelihood of the stock falling to ₹890. Investors can hold the long positions.

RIL may dip before reversing higher (₹929.45)

RIL extended its rally for the fourth consecutive week and was up 2 per cent last week. The stock has surged a whopping 18.8 per cent over the last four weeks. It made an intra-week high of ₹958 and has come off from there. Inability to bounce above ₹950 from the current levels may trigger a fall in the coming days. A fall to ₹916 is likely initially in such a scenario. Further break below ₹916 can drag the stock lower to ₹900 or ₹891 — a key near-term support which is likely to limit the downside. An upward reversal from there can take the stock higher to ₹950 levels again. But a break below ₹891 will increase the likelihood of the stock extending its fall to ₹865. On the other hand, the stock will gain fresh momentum if it manages to break and make a decisive daily close above ₹950. Such a break can take RIL to test the psychological resistance level of ₹1,000. Traders with a medium-term perspective can go long on dips at ₹916. Accumulate longs at ₹900. Stop-loss can be placed at ₹880 for the target of ₹985.

Key hurdle ahead for Tata Steel (₹726.25)

Tata Steel surged over 3 per cent in the past week, breaking above an immediate resistance level of ₹712. The uptrend is intact. Support is at ₹718, which is likely to limit the downside in the near term. As long as the stock trades above this support, there is a strong likelihood of it moving up to test the next key resistance level of ₹745 in the coming days. Inability to break above this hurdle can trigger a pull-back move to ₹720 initially. Further break below ₹720 will increase the possibility of the downmove extending to ₹700 or ₹690. The region between ₹690 and ₹680 is a key short-term support. The outlook will turn negative only if the stock declines below ₹680. On the other hand, Tata Steel can gain further momentum if it breaks above ₹745 decisively. Such a break can take the stock higher to ₹800 levels or even ₹850 thereafter. Investors can hold the long positions. Retain the stop-loss at ₹630 and revise it higher to ₹645 as soon as the stock moves up to ₹740.

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