Weekly Trading Guide

Near-term outlook is positive for SBI

SBI (₹319.8)

SBI began the week on a volatile note and swung between ₹301 and ₹323 on the first trading day of the week. But that was short-lived and the stock stayed in a narrow range for the rest of the week. As long as it sustains above ₹315, the bias will remain positive for the stock to break above the immediate resistance at ₹325. Such a break will ease the downside pressure and take the stock higher to ₹335 initially. Further break above ₹335 will increase the likelihood of the upmove extending to ₹347 or ₹350 thereafter. Short-term traders with high risk appetite can go long and accumulate on dips at ₹315. Stop-loss can be placed at ₹304 for the target of ₹345. Revise the stop-loss higher to ₹323 as soon as the stock moves up to ₹330. Cluster of supports are poised in between ₹315 and ₹310. The short-term outlook will turn negative only if SBI declines below ₹310 decisively. Such a break can push the stock lower towards ₹306 initially. A strong break below ₹306 will increase the possibility of the stock tumbling to ₹295 or even ₹290 thereafter.

ITC can remain range bound with a bullish bias

ITC (₹263.3)

The stock of ITC fell over 2 per cent initially in the past week. However, it managed to reverse higher from the low of ₹259 and recoup almost all the loss. Immediate resistances are placed at ₹266 and ₹268 levels. Supports are at ₹261 and ₹260. ITC can remain range-bound in the band between ₹260 and ₹268 for some time. On the charts, the bias is bullish for the stock to break the range above ₹268 in the coming days. Such a break can boost the momentum and take the stock higher to ₹271 or ₹272 initially. Further break above ₹272 will then increase the likelihood of the stock’s rally extending to ₹277 in the coming weeks. On the other hand, if ITC declines below ₹260 in the coming days, it can fall to ₹257 or ₹256 initially. A strong break below ₹256 may increase the likelihood of the stock falling to ₹252 or ₹250 thereafter. Short-term traders with a high risk appetite can buy the stock on dips at ₹261 and accumulate at ₹258. Stop-loss can be placed at ₹254 for the target of ₹275. Revise the stop-loss higher to ₹265 as soon as the stock moves up to ₹270 levels.

Initial sign of trend reversal emerges for Infosys

Infosys (₹1,038.4)

The stock extended its upmove for the third consecutive week and has closed on a strong note — above the crucial resistance level of ₹1,035, thereby giving an initial sign that the downtrend that has been in place since June 2016 has ended. Immediate support is between ₹1,035 and ₹1,030. As long as the stock sustains above ₹1,030, there is a strong likelihood of it rallying to ₹1,050 and ₹1,070 in the coming days. Such a rally will confirm the trend reversal. Inability to break above ₹1,070 may trigger an intermediate pull-back move to ₹1,030. In such a scenario, fresh buyers may emerge at lower levels and limit the downside. An eventual break above ₹1,070 will pave way for ₹1,100 and even higher levels. It will also gear up the stock to target ₹1,350 levels over the long-term. The near-term view will turn negative only if Infosys declines below ₹1,000. In such a scenario, the stock can fall to ₹980 or ₹975 on the back of profit booking. But such a fall below ₹1,000 looks less likely at the moment. Investors can hold the long positions.

Near-term resistance caps upside for RIL

RIL (₹918.5)

The stock of Reliance Industries (RIL) spiked lower to make a low of ₹861.7 on last Monday. Though it bounced back immediately, it did not gain momentum to breach the 21-day moving average resistance at ₹923. RIL has to break above this 21-day moving average resistance decisively for the downside pressure to ease and also to gain strength to move higher. Such a break will pave the way for a fresh rally to ₹950 and ₹960. But if RIL stays under ₹923, it can continue to remain under pressure. A dip to test a key support at ₹900 is possible then. A break below ₹900 can take it lower to ₹880 — a crucial short-term support level. If the stock manages to reverse higher from there, it can test ₹900 and even higher levels thereafter. In such a scenario, a range bound move between ₹880 and ₹960 can be seen for some time. But if RIL declines below ₹880 decisively, it can fall to ₹845 levels. As mentioned last week, a sharp fall to ₹845 will confirm a double-top reversal pattern on the chart and will leave the stock in a danger of tumbling to ₹800 or even lower.

Tata Steel gears up for a fresh rally

Tata Steel (₹710.6)

Tata Steel fell sharply to make a low of ₹675 initially in the past week. However, it reversed sharply higher thereafter to recover all the loss and close 2.3 per cent higher for the week. The stock has been getting strong support from the 21-week moving average over the last three weeks. The price action on the chart keeps the bias bullish for the stock. Key resistance is at ₹715, which is likely to be broken in the coming days. Such a break can boost the momentum and take it higher to ₹740 and ₹750, which are the next key resistances. Inability to break above ₹750 can trigger an intermediate pull-back move to ₹720 or ₹715. However, an eventual break above ₹750 will then pave way for the long-term targets of ₹850 and ₹900. Medium-term investors can hold the long positions. Retain the stop-loss at ₹585. The short-term outlook will turn negative only if the stock declines below the support at ₹670. In such a scenario, the stock can fall to ₹660 and ₹650. But such a break and fall below ₹670 looks less probable at the moment.



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