Day trading guide

Weekly Trading Guide

Gurumurthy K | Updated on January 11, 2018 Published on July 29, 2017

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A key resistance ahead for SBI

SBI (₹299.2)

SBI rose 3 per cent and closed below a key near-term resistance level of ₹302 last week. Inability to break above this hurdle can drag the stock lower to ₹293 or ₹290 this week. In such a scenario, a range-bound move between ₹290 and ₹302 is possible for some time. Further fall below ₹290 is less likely as the bias is bullish and the indicators on the chart suggest that the downside could be limited in the near term. On the other hand, if SBI manages to breach above ₹302 in the coming days, it can move up to ₹309 initially. Further break above ₹309 will increase the likelihood of the stock extending its up-move to ₹315. Such a rally will also keep the possibility alive for the stock to test its long-term resistance level of ₹327. Traders can hold the long positions and retain the stop-loss at ₹277 for the target of ₹320. Accumulate on dips near ₹294. Revise the stop-loss higher to ₹282 as soon as the stock moves up to ₹305. The near-term outlook will turn negative if SBI breaks below ₹284. Such a break can drag the stock lower to ₹275 or ₹273.

Immediate outlook is unclear for ITC

ITC (₹291.25)

ITC remained range-bound last week after having tumbled 14 per cent in the week earlier. The immediate outlook is not clear. Traders can continue to stay out of this stock until a clear trend emerges. Immediate resistance is at ₹295. The stock may get a breather if it breaks above this hurdle and can then rise to ₹302. A decisive break above ₹302 will ease the downside pressure and take ithigher to ₹308 or ₹313. On the other hand, if the stock sustains below the immediate resistance at ₹295, it can continue to remain under pressure. In such a scenario, the possibility of the stock declining below the immediate support at ₹286 will remain high. A strong break below ₹286 can take the stock lower to ₹280 once again. Further fall below ₹280 can see the down-move extending to ₹270 — the 200-day moving average support level. ITC has series of supports between ₹270 and ₹260. A fall below ₹260 is unlikely at the moment. So long-term investors can consider entering this stock around ₹270 and accumulating if the current fall extends to ₹265 and ₹260.

Short-term outlook is bullish for Infosys

Infosys (₹997.8)

Infosys, which was inching higher in the initial part of the week, turned volatile towards the end of the week. It fell sharply from around ₹1,000 on Thursday and recovered immediately on Friday from a low of around ₹963 to close just below ₹1,000. The daily chart suggests a range-bound move between ₹960 and ₹1,005. A breakout on either side of ₹965 or ₹1,005 will determine the next move. The price action on the weekly chart leaves the possibility high for the stock to break above ₹1,005 in the coming days. A strong break above ₹1,005 can take the stock higher to ₹1,035 and ₹1,045. Inability to break above ₹1,045 can pull the stock lower to ₹1,005 once again. In such a scenario, the broader ₹900-₹1,045 range, which has been in place since November 2016, will remain intact. But if Infosys breaks above ₹1,045, it can test ₹1,060 initially. Further break above ₹1,060 will increase the possibility of the stock revisiting ₹1,100 levels. Investors can hold the long positions. The short-term outlook will turn negative only if the stock declines below ₹960. The targets on a fall below ₹960 are ₹940 and ₹930.

Key resistances cap the upside in RIL

RIL (₹1,594.2)

RIL broke above ₹1,600 and surged toward ₹1,630 last week, as expected. But the stock faced strong resistance around ₹1,630 and has come-off from the week’s high of ₹1,631. Immediate resistance is at ₹1,605. Inability to bounce above it can take the stock lower to ₹1,560 or ₹1,550 in the coming days. An upward reversal from the ₹1,560-₹1,550 support zone can take the stock higher to ₹1,600 and ₹1,630 levels once again. A crucial medium-term trend resistance is at ₹1,645, which should be broken decisively for RIL to extend its current rally. A strong break and decisive monthly close above ₹1,645 can see RIL surging to ₹1,850 levels in the coming months. But given that the stock has risen sharply in a very short span of time, a corrective fall from ₹1,645 to ₹1,550 or ₹1,500 could be healthy to keep the overall uptrend intact. The downside could be limited to ₹1,500 as fresh buying may emerge at lower levels. Investors can hold the long positions. Keep the stop-loss at ₹1,460 and revise it higher to ₹1,520 as soon as the stock moves up to ₹1,640.

Tata Steel may decline

Tata Steel (₹551.6)

Tata Steel failed to sustain the bounce back move witnessed earlier last week. The stock reversed lower in the latter part of the week from a high of ₹568.6. It closed almost flat for the week. The near-term view is negative. A fall to ₹540 or ₹535 looks likely in the coming days. Cluster of supports are poised around ₹535 and an immediate break below it is less probable. An upward reversal from around ₹535 can take the stock higher to ₹570 and ₹580 levels once again. As mentioned last week, the level of ₹580 is a significant long-term resistance. Whether the stock manages to surpass this hurdle or not will decide the next trend. A strong break and a decisive close above ₹580 will pave way for a fresh rally targeting ₹650 and ₹700. Investors can hold the long positions. Retain the stop-loss at ₹495 and revise it higher to ₹515 as soon as the stock moves up to ₹575. The short-term outlook will turn negative only if the stock breaks below ₹535 decisively. Such a break will increase the possibility of the stock declining to ₹500 or even lower levels thereafter.

Published on July 29, 2017
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