Weekly Trading Guide

SBI (₹309.5)

SBI fell over 3 per cent last week. The fall has dragged the stock well below the key support level of ₹315. A cluster of resistances in between ₹315 and ₹320 can cap the upside in the coming days. The price action last week has turned the short-term outlook bearish. Also, a complex head and shoulder reversal pattern on the daily chart increases the likelihood of the stock falling in the coming days. Traders holding long positions can book loss and exit at current levels. The stock can fall to ₹300 initially. A break below ₹300 can drag it further lower to ₹296 and ₹293 or even ₹290 thereafter. Traders with high risk appetite can go short at current levels and on rallies at ₹314. Keep the stop-loss at ₹317 for the target of ₹294.

Revise the stop-loss lower to ₹306 as soon as the stock moves down to ₹301. The downside pressure will ease only if the stock breaks above ₹315 decisively. Such a break can take it to ₹320 initially. However, the stock has to breach ₹320 for the outlook to turn positive.

ITC (₹263.1)

ITC was stuck in a narrow range over the last few weeks. The stock has been in between the 21-day moving average support at ₹260 and the 100-day moving average resistance at ₹267 over the last three weeks. A breakout on either side of ₹260 or ₹267 will determine the next trend.

If ITC manages to surpass ₹267 decisively, it can move up to ₹272 initially. It will also be an initial sign that the downtrend that has been in place since July 2017 is being reversed. A further rally breaking above ₹272 can then target ₹277 or ₹280, confirming the trend reversal. On the other hand, if ITC remains below ₹267 and breaks below ₹260, it can fall to ₹257 — a key short-term support level. A strong break below ₹257 will increase the likelihood of the stock tumbling to ₹252 thereafter. Traders who have taken long positions on dips last week at ₹261 can hold it. Accumulate longs at ₹258. Retain the stop-loss at ₹254 for the target of ₹275. Revise the stop-loss higher to ₹265 as soon as the stock moves up to ₹270.

Infosys (₹1,039.3)

Infosys had a volatile 2017. At one point of time the stock had tumbled about 15 per cent. But it recovered all the losses and has gained 3 per cent in 2017. . This recovery rally, which has taken the stock above the crucial ₹1,030-₹1,035 resistance zone, is signalling a trend reversal and the worst seems to be over. Immediate support is in between ₹1,035 and ₹1,030 and then the next significant support is around ₹1,000. As long as the stock remains above ₹1,000, the outlook is positive. A rally to ₹1,070 is likely in the short term, which will confirm the trend reversal. It will pave the way for the stock to target ₹1,350 levels. Inability to break above ₹1,070 initially can trigger an intermediate pull-back move to ₹1,050 and ₹1,035.

Investors can hold the long positions and accumulate on dips at ₹1,015. The short-term outlook will turn negative only if the stock declines below ₹1,000. Subsequent targets are ₹980 and ₹965. But such a fall below ₹1,000 is less likely as dips to ₹1,000 may find fresh buyers coming into the market.

RIL (₹921)

RIL, which has surged a whopping 71 per cent in 2017, witnessed muted trading in the final week of the year. The stock managed to sustain above ₹900, but remained in a narrow range all through the week. Support is at ₹912 and immediate resistance is at ₹935. A breakout on either side of these levels will give a cue on the next trend. A strong break and a decisive close above ₹935 can take RIL higher to ₹960 — a crucial resistance that has been capping the upside since October. Inability to break above ₹960 can pull the stock lower to ₹935 or even further down. But a strong break above ₹960 can target the psychological ₹1,000 level.

On the other hand, if RIL breaks below ₹912 in the coming days, it can fall to ₹896 initially. A further break below ₹896 can drag it to ₹880 — a crucial short-term support level. As reiterated over the last couple of weeks, a strong break below ₹880 will indicate a double top pattern on the chart and can drag the stock to ₹854 or even lower thereafter.

Tata Steel (₹732.4)

Year 2017 was a robust one for Tata Steel. The stock surged a whopping 87 per cent last year. The strong 3 per cent rally last week has taken the stock well above a key resistance level of ₹715, which has been capping the upside over the last several weeks. This marks the end of the sideways consolidation and also the resumption of the overall uptrend. Resistance is at ₹743, which was tested last week.

A strong break and a decisive weekly close above this hurdle is needed for the stock to extend its rally. Such a break will boost the momentum for the stock to target ₹850 over the medium term. But if Tata Steel continues to remain below ₹743, it can dip to ₹715 or ₹710 in the coming days. An immediate break below ₹710 is unlikely at the moment. So, as long as the stock remains below ₹743, a range-bound move between ₹710 and ₹743 can be seen for some time. Medium-term investors can hold the long positions. Accumulate on dips at ₹720. Revise the stop-loss higher to ₹615.

Read the rest of this article by Signing up for Portfolio.It's completely free!

What You'll Get



 Getting recommendations just for you...
This article is closed for comments.
Please Email the Editor