Bellwethers. Weekly Trading Guide

SBI has been range-bound over the last couple of weeks. The stock has been stuck in between ₹279 and ₹293. The near-term outlook is mixed. The stock can retain its sideways move. A breakout on either side of ₹279 or ₹293 will determine the direction of the next move. A cluster of trend lines and moving averages around ₹279 makes it a strong support level and a break below it looks less likely. This keeps the bias positive and there is a high possibility of the stock breaking above ₹293 in the coming days. Such a move can take the stock initially higher to ₹311. A further break above ₹311 will then increase the likelihood of the stock extending its up-move towards ₹320 and ₹322. Medium-term traders can hold the long positions taken at ₹282 and ₹279. Retain the stop-loss at ₹269 for the target of ₹308. Revise the stop-loss higher to ₹287 as soon as the stock moves up to ₹294. The bullish outlook will get negated and the stock will come under pressure if it declines decisively below ₹279. In such a scenario, the stock can fall to ₹271.

ITC inched higher for the second consecutive week. The stock was up 2 per cent last week. The up-move over the last two weeks seems to be lacking strength. However, the indicators on the chart give positive signals. The 21-day moving average is turning around after touching the 200-day moving average. This is a bullish signal, indicating that the trend is turning up. A key resistance is in the ₹292-₹293 region, which is likely to be tested in the near term. A strong break above ₹293 can take ITC initially higher to ₹297 and ₹300. Inability to breach the ₹297-300 resistance zone can trigger a pull-back move to ₹290. But a further break above ₹300 will take the stock to ₹307 and ₹311 over the medium term. Traders can hold the long positions taken at ₹283 and ₹280 with a revised stop-loss at ₹285. Book profits at ₹298. Move the stop-loss higher to ₹288 as soon as the stock moves up to ₹293. Key support is at ₹279. The stock will come under pressure only if ITC declines below this support. A break below ₹279 can target ₹272.

Infosys fell 3 per cent initially to make a low of ₹600. However, the stock bounced sharply from the low recovering all the loss and closed 7 per cent higher for the week. The crucial support in the ₹600-590 zone mentioned last week is holding well as of now. The stock has got some relief now. The price action in the coming weeks will give a cue on whether the corrective fall has ended or not. Cluster of resistances are poised between ₹685 and ₹700, which is likely to be tested in the near term. Only a strong break and a decisive close above ₹700 will give an initial sign that the trend has reversed. Such a break will then increase the likelihood of the stock moving up to ₹720. But if Infosys fails to breach ₹700 and reverses lower, it can fall to ₹650 and ₹640 levels again. A range-bound move between ₹600 and ₹700 can be seen for some time. A breakout on either side of ₹600 or ₹700 will then decide the direction of the next move.

RIL resumed its up-move last week. After a brief 2 per cent fall last week, RIL bounced sharply last week and closed on a strong note. The stock was up 6 per cent last week. The price action over the last two weeks indicates that RIL has strong support and fresh buying interest around the psychological level of ₹1,100. This has kept the bullish outlook intact. The region between ₹1,150 and ₹1,140 will now act as a strong near-term support. The stock can move further up in the near term to test the resistance at ₹1,200. Inability to breach ₹1,200 can trigger a pull-back move to ₹1,150 and ₹1,140 thereafter. But a strong break above ₹1,200 can take the stock higher to ₹1,225 — the next significant resistance level. A further break above ₹1,225 will boost the momentum. Such a break will then increase the likelihood of the stock extending its rally to ₹1,250 and ₹1,270. Traders can hold the long positions taken at ₹1,115 and ₹1,105 with a revised stop-loss at ₹1,130. Move the stop-loss further higher to ₹1,160 as soon as RIL moves up to ₹1,180. Book profits at ₹1,195.

Tata Steel fell last week as expected. The stock tumbled about 5 per cent intraweek to make a low of ₹513. However, it managed to bounce from the low, recovering some of the loss and closed 1.8 per cent lower for the week. The bounce-back move from ₹513 seems to be lacking strength. Key resistance is in the ₹540-550 zone and then in the ₹570-580 region. The downside pressure will ease only if Tata Steel breaks decisively above ₹580. But such a strong up-move looks unlikely at the moment as fresh selling interest is likely to emerge at higher levels in the ₹570-580 resistance zone. As such, the stock falling to test the crucial ₹500-₹490 support zone is likely in the near term. A strong break below ₹490 will then increase the likelihood of the stock tumbling to ₹460. Traders who have taken short positions at ₹540 can hold. Accumulate shorts at ₹545 and ₹555. Retain the stop-loss at ₹590 for the target of ₹465. Revise the stop-loss to ₹527 as soon as the stock moves down to ₹505.

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