Weekly Trading Guide

Resistance caps the upside in SBI

SBI (₹332.2)

SBI snapped its four-week rally and fell 1.5 per cent last week. The level of ₹337 is restricting the upside in the stock. As long as SBI stays below ₹337, there is a strong likelihood of it falling to ₹325 in the near term. If it manages to bounce back from ₹325, it can rise to ₹335 and ₹337. In such a scenario, a range-bound move in the band between ₹325 and ₹337 is possible for some time. But if SBI declines below ₹325, it can come under more selling pressure. In such a scenario, the stock can fall to ₹314 in the short term. On the other hand, if the stock manages to breach ₹337 decisively, it can rise to test the key resistance level of ₹343 initially. A strong break and a decisive close above ₹343 will boost the momentum and can take the stock higher to ₹348. Such a break will also be a sign of fresh leg of an upmove. An eventual break above ₹348 will then take the stock higher to the level of ₹365 over the medium term. Traders can stay out of the market until a clear trade signal emerges.

Downside pressure eases for ITC

ITC (260.3)

ITC sustained above the support level of ₹256 and got a breather by rallying one per cent last week. Key resistances are at ₹262 and ₹264 which are likely to be tested this week. A strong break and a decisive close above ₹264 will ease the downside pressure further. Such a break can take the stock higher to ₹269. The region between ₹269 and ₹272 is a crucial short-term resistance. The stock has to surpass this hurdle to bring back the positive sentiment. On the other hand, if ITC fails to breach ₹264 and reverses lower, it can fall again. In such a scenario, the stock can decline to test ₹256 initially. Further break below ₹256 will increase the likelihood of the stock extending its downmove to ₹254 or ₹253 thereafter. The 100-week moving average at ₹253 is a key short-term support. If the stock declines below this support, it can fall to test the crucial long-term support level of ₹248. The downtrend that has been in place since July this year is likely to halt at this long-term support level of ₹248.

Infosys hovers below key resistances

Infosys (₹1,009.9)

Infosys extended its rally for the third consecutive week and was up 4 per cent last week. The stock has surged 9 per cent over the last three weeks. A strong break above the immediate resistance at ₹1,020 is needed for the upmove to extend further. Such a break can take Infosys higher to the next significant resistance level of ₹1,032. Whether Infosys breaks above ₹1,032 or not will decide the next trend. A strong break and a decisive weekly close above ₹1,032 will be the first sign, indicating that the downtrend that has been in place since June 2016 has ended. In such a scenario, the stock may be all set to revisit ₹1,200 levels over the long term. But a pull-back from ₹1,032 will keep the sideways consolidation intact and drag it to ₹1,000 or even lower levels thereafter. But if Infosys sustains below ₹1,020, it can fall below ₹1,000 and target ₹975. Further break below ₹975 will increase the likelihood of the downmove extending to ₹945. Investors can hold the long positions.

Key resistance ahead for RIL

RIL (₹949.5)

RIL was up for the second consecutive week. The stock surged 4.4 per cent last week. The key resistance at ₹959 was tested and this hurdle has held well last week. The short positions recommended have not played out in the rally witnessed last week. Whether RIL manages to breach the resistance at ₹959 or not will decide the trend for the coming week. Inability to break above ₹959 can take the stock lower to ₹925 or ₹919 — the 21-day moving average support levels — in the near term. A break below ₹920 can take the stock further lower to ₹911 — a significant intermediate support level. Such a fall will also increase the likelihood of it extending its downmove below ₹900 and target ₹880 in the short term. If RIL manages to breach above ₹959, it can gain momentum and the stock targeting the psychological ₹1,000 mark. Traders can stay out of the market. Watch the price action in the coming days to get a clear cue on the next trend and take trade positions accordingly.

Supports can limit the fall in Tata Steel

Tata Steel (₹707.7)

The strong bounce-back move after an initial dip to ₹690 in Tata Steel failed to sustain all through the week. The stock tested the resistance at ₹718 and has come-off slightly from there. Immediate support is at ₹702 — the 21-day moving average. If the stock manages to sustain above this support, there is a high possibility of it breaking above ₹718. Such a break can take it higher to ₹732. Further break above ₹732 can take the stock up to ₹74. But, if Tata Steel breaks below the 21-day moving average support, it can fall to ₹690. A break below ₹690 can drag it further lower to ₹683. However, the broader picture is bullish with strong support between ₹670 and ₹650, which can limit the downside. Fresh buying interest is likely to emerge at lower levels if the stock declines below ₹680. So any corrective fall in the stock will be a good buying opportunity. Investors can hold the long positions and retain the stop-loss at ₹630 level.

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