Weekly Trading Guide

SBI (₹291.6)

SBI extended its upmove for the second consecutive week. The sharp 6.6 per cent bounce-back rally in the last two weeks confirms the failure of the head and shoulder reversal pattern that was formed between April and June. This keeps the broader uptrend intact. A rise to ₹300 is likely in the near term. Inability to break above ₹300 can trigger pull-back move to ₹290 or ₹285. Support in the ₹285-₹283 region can limit the downside. An eventual break above ₹300 can take the stock higher to ₹306 or ₹308. Further break above ₹308 will see the upmove extending to ₹315. Such a rally will also increase the likelihood of the stock targeting the long-term resistance level of ₹327. Traders with a medium-term perspective can go long at current levels. Accumulate on dips near ₹286. Keep the stop-loss at ₹277 for the target of ₹320. Revise the stop-loss higher to ₹282 as soon as the stock moves up to ₹305. The stock will come under pressure again only if it declines below ₹283 decisively. Such a break can drag it lower to ₹275 or even ₹270 once again.

ITC (₹337.2)

The support at ₹327 has held well last week. ITC made an intra-week low of ₹327.3 and has moved higher from there. Immediate resistance is at ₹340. Inability to surpass this hurdle can pull the stock lower to ₹328 once again. But if ITC manages to breach ₹340 decisively, it can gain fresh momentum and surge to ₹350 and ₹355 thereafter. The level of ₹355 is a key long-term trend resistance. The price action after testing this resistance will need a close watch to get a cue on the direction of the next move in the stock. On the other hand, if ITC fails to break above ₹340 in the coming days and declines below ₹327, it can fall to ₹322. Further fall below ₹322 looks less likely at the moment. The bias on the chart is positive and ITC is expected to sustain above ₹327. Short-term traders with high risk appetite can go long on dips at ₹330. Stop-loss can be placed at ₹321 for the target of ₹353. Accumulate longs at ₹325 if the stock declines, breaking below ₹327. Revise the stop-loss to ₹335 as soon as the stock moves up to ₹345.

Infosys (₹972)

Infosys surged to a high of ₹1,006 but gave up some of the gains to close 3.8 per cent higher for the week. Immediate support is at ₹968. Whether the stock manages to sustain above this support or not will decide the next move. A decisive break below ₹968 can take the stock lower to ₹948. Further fall below ₹948 will increase the likelihood of the stock extending its downmove to ₹935 or even ₹925. On the other hand, if Infosys manages to sustain above ₹968, a rise to revisit ₹1,000 level is possible. Key resistance is at ₹1,007 which can be tested as long as the stock trades above ₹968. Inability to break above ₹1,007 can keep the stock range-bound between ₹968 and ₹1,007 for some time. But a strong break above ₹1,007 will increase the possibility of the stock rallying to ₹1,035 and ₹1,045 levels. Overall, the broader ₹900-₹1,045 sideways range that has been in place since November 2016 is still intact. A strong breakout on either side of ₹900 or ₹1,045 will give a clear cue on the next trend for the stock. Investors can hold the long positions.

RIL (₹1,531)

RIL rose 2.7 per cent last week breaking above the psychological resistance level of ₹1,500. The bullish outlook is intact. Immediate resistance is at ₹1,533. A strong break above itwill increase the likelihood of the stock revisiting its all-time high of ₹1,626 recorded way back in January 2008. On the other hand, if RIL fails to surpass the immediate resistance at ₹1,533 in the coming days, it can dip to test the near-term support at ₹1,515 initially. A break below this support will increase the likelihood of the stock extending its downmove to ₹1,505 or even ₹1,485 in the short-term. Further fall below ₹1,485 is less probable at the moment as fresh buying interest could emerge on dips around the psychological level of ₹1,500. But if RIL declines below ₹1,485, the downmove can extend to ₹1,450. The level of ₹1,450 is a key medium-term support which is likely to limit the downside in the stock. Investors can hold the long positions. Revise the stop-loss higher to ₹1,325. Book partial profits at ₹1,600 and move the stop-loss on the rest of the holdings to ₹1,425 thereafter.

Tata Steel (₹559.5)

Tata Steel continued to inch higher at a slower pace for the second consecutive week. The stock was up 1 per cent last week. Inability to bounce from current levels may take the stock lower to ₹555 or ₹550 in the near term. An upward reversal from ₹550 can will increase the possibility of the stock moving higher to ₹570 thereafter. A strong break above ₹570 can take the stock higher to ₹575 and ₹580. The level of ₹580 is a crucial long-term resistance. Whether Tata Steel breaks above ₹580 or not, will decide the next trend. As such, the price action after testing this key resistance at ₹580 will need a close watch to get a cue on the next move. Investors can hold the long positions with a revised stop-loss at ₹495. Move the stop-loss further higher to ₹515 as soon as the stock moves up to ₹575. On the other hand, if Tata Steel declines below ₹550 in the coming days, it can fall to ₹535 or ₹530. Cluster of supports are poised around ₹530. So further fall below ₹530 is less probable at the moment.

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