Weekly Trading Guide

Key resistance ahead for SBI (₹333.2)

SBI was volatile in the past week. Though the stock fell initially, the sharp 6 per cent rally on Friday helped the stock recover all the loss made during the week and close 2.5 per cent higher for the week. Resistance is near current levels at ₹334. Inability to break above it can drag the stock lower to ₹323 initially. Further break below ₹323 will increase the likelihood of the fall extending to ₹315 or ₹310. On the other hand, if SBI manages to breach ₹334, it can test the key medium-term resistance level of ₹343. A strong break and a decisive weekly close above this hurdle will increase the possibility of the stock targeting ₹366 over the medium-term. A pull-back from this hurdle can trigger a corrective fall to ₹335. Investors with a medium-term perspective can make use of dips to go long at ₹325. Accumulate longs at ₹315 and ₹310. Keep the stop-loss at ₹303 and revise it higher to ₹335 as soon as the stock moves up to ₹345. Profits can be booked at ₹365.

RIL likely to fall further in the short term (₹883.5)

RIL snapped its five-week rally. The stock tumbled 6.6 per cent last week breaking below the key support levels of ₹920 and ₹895 and signalling the beginning of a corrective fall. Resistances at ₹900 and then in between ₹915 and ₹925 can cap the upside in the short-term. Immediate bounce to these resistances is likely to see fresh sellers. A fall to ₹850 is likely in the near-term on the back of profit booking. If the stock manages to bounce back from ₹850, a relief rally to ₹880 or ₹900 is possible. But if RIL declines below ₹850, the corrective fall can extend to ₹820. Short-term traders with high risk appetite can go short at current levels and on rallies at ₹895 and ₹910. Stop-loss can be placed at ₹935 for the target of ₹820. Revise the stop-loss lower to ₹870 as soon as the stock moves down ₹860. The outlook will turn bullish again only if the stock breaks above ₹925 decisively. Such a break will increase the possibility of the stock revisiting ₹950 and ₹960 levels.

Short term outlook is bullish for Infosys (₹960.6)

Infosys surged 3.7 per cent last week. The stock has been volatile over the last few weeks —falling sharply one week and recovering thereafter. Though the weekly chart suggests a range bound move, the bias on the daily chart is bullish. Also the 21-day moving average is on the verge of breaking above the 100-day moving average, a bullish signal indicating that the downside could be limited in the near-term. Support is in the ₹938-₹936 zone can limit the downside. Dips to this support zone may find fresh buying interest in the stock. A rally to ₹985 is likely in the coming days. A strong break above ₹985 will increase the likelihood of the upmove extending to ₹1,020 or ₹1,030 thereafter. Investors can hold the long positions. The bullish outlook will get negated only if the stock declines below ₹936. Such a break can take Infosys lower to ₹920 or ₹915. The outlook will turn negative only if the stock breaks below ₹915. But such a break looks less probable at the moment.

Near term view is negative for ITC (₹261.3)

ITC fell for the second consecutive week and was down 1.5 per cent. The fall last week has taken the stock well below the key support level of ₹263. The levels of ₹264 and ₹266 – the 21-day moving average are the key near-term resistances. A strong break above ₹266 is needed for the downside pressure to ease and take the stock higher to ₹270 or ₹272. Inability to break above ₹272 can drag the stock lower to ₹265 and ₹263 again. On the other hand, if ITC continues to sustain below ₹264 and ₹266 in the coming days, there is a strong likelihood of it falling to ₹256. A break below ₹256 can then drag the stock further lower to the crucial support zone of ₹252 and ₹250. Whether the stock manages to reverse higher from there or not will decide the next leg of move. Short-term traders with high risk appetite can go short on rallies at ₹264. Keep the stop-loss at ₹267 for the target of ₹258. Revise the stop-loss lower to ₹262 as soon as the stock moves down to ₹260.

Immediate outlook is mixed for Tata Steel (₹701.4)

Tata Steel fell over 3 per cent intra-week but managed to recover thereafter and close 1 per cent lower for the week. On the chart, last week’s candle reflects indecisiveness. Immediate resistance is at ₹709. A break above it can take the stock higher to ₹724. But if Tata Steel fails to break above ₹709 and declines below ₹700, it can fall to ₹690 and ₹685 again. A break below ₹685 can take it to ₹680 — the 55-day moving average. Inability to bounce from this support and an eventual break below it can increase the downside pressure. Also, the possibility of the stock falling to ₹660 will increase on the back of profit booking. However, such a fall can be a good buying opportunity. The region between ₹650 and ₹630 is a strong support zone, which is likely to limit the downside and keep the overall uptrend intact. Investors can hold the long positions and accumulate on dips at ₹660. Retain the stop-loss at ₹630.

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