Day trading guide

Weekly Trading Guide

Gurumurthy K | Updated on January 09, 2018 Published on August 13, 2017

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SBI (₹280.6)

SBI tumbled 8 per cent last week, thereby triggering the stop-loss at ₹282. The immediate outlook is negative. A fall to ₹276 — the 200-day moving average support is likely in the coming days. If the stock manages to bounce from this support, a relief rally to ₹285 and ₹287 is possible. Key resistances are at ₹287 and ₹290, which can cap the upside in the short term. But a downward reversal from this resistance can pull the stock lower to ₹280. An eventual break below the 200-day moving average support can drag the stock further lower to ₹270 or ₹268. Traders can wait for a bounce and go short at ₹285. Stop-loss can be placed at ₹291. Accumulate short positions at ₹287. Revise the stop-loss lower to ₹283 as soon as the stock moves down to ₹278. Traders should avoid taking long positions as there is an early sign of a top formation for the uptrend that had begun in February 2016. A strong fall below ₹268 will confirm this and can drag SBI lower to ₹250 and ₹245.

ITC (₹271.5)

ITC fell for the second consecutive week. The stock was down 2.7 per cent last week. It now hovers above the 200-day moving average support at ₹271. The downtrend remains intact. However, if the stock manages to sustain above ₹271, an intermediate bounce to ₹280 or ₹281 is possible. But further rise above ₹281 is unlikely. An eventual break below ₹271 will increase the likelihood of the stock extending its downmove to ₹260 or ₹258. As being reiterated in this column over the last few weeks, the region between ₹260 and ₹255 is a key long-term support zone for ITC. Further fall breaking below this support zone is less likely. A strong bounce from this support zone will keep the uptrend that has been in place since February 2016 intact. In such a scenario, a fresh rally to ₹280 and ₹290 levels is possible thereafter. The rally that begins from the ₹260-₹255 zone could be slow. So it might take a long time to break above ₹300. Long-term investors can buy the stock at ₹260.

Infosys (₹987.7)

Infosys fell in the initial part of last week. However, it managed to reverse sharply higher after making a low of ₹955.55 on Tuesday. The stock will come under pressure only if it declines below ₹955. The next target is ₹935. But such a fall looks less probable. Immediate resistance is at ₹993. A strong break above this hurdle can take the stock higher to ₹1,005. Further break above ₹1,005 will increase the likelihood of the stock extending its rally to ₹1,030 and ₹1,035. A crucial resistance is at ₹1,045. Inability to break above it and a downward reversal from there can drag the stock lower to ₹1,000 once again. In such a scenario, the ₹900-₹1,045 sideways range that has been in place since November 2016 will be intact. But if Infosys manages to surpass the hurdle at ₹1,045, it can move up to ₹1,060 and ₹1,070. This will be an initial sign of a trend reversal. A strong break above ₹1,070 will confirm the trend reversal and see the stock rallying to ₹1,100.

RIL (₹1,546.5)

The key medium-term resistance at around ₹1,650 continues to cap the upside in RIL. The stock made a high of ₹1,663 and reversed sharply lower, tumbling 4.6 per cent for the week. Inability to sustain the break above ₹1,650 for two consecutive weeks, followed by a strong fall, signals the beginning of a corrective fall. Investors holding long positions can book profits. Immediate support is at ₹1,535, which was tested last week. If the stock manages to sustain above this level and reverses higher, an interim bounce to ₹1,600 or ₹1,620 — a key resistance zone — is possible. Inability to break above this zone can drag the stock lower to ₹1,550 and ₹1,535 once again. Short-term traders can make use of rallies to go short at ₹1,600 with a stop-loss at ₹1,635 for the target of ₹1,535. An eventual break below ₹1,535 will increase the selling pressure. The stock can decline to ₹1,500 or ₹1,470 thereafter. This will be a good buying opportunity for the long-term investors.

Tata Steel (₹596.1)

Tata Steel shrugged-off the nervousness in the broader markets and surged over 8 per cent during intraweek to record a high of ₹624.95. But the stock gave back some of the gains in the last three trading days and closed the week, 3.6 per cent higher. The overall uptrend remains intact. But there is a possibility of the downmove that had begun towards the end of last week to extend in the coming week as well. In such a scenario, Tata Steel can fall to ₹583 or ₹579 in the coming days. If the stock manages to reverse higher from the ₹583-₹579 support zone, it can move up to ₹600 and ₹625 once again. In such a scenario, the possibility of the stock targeting ₹700 levels will remain high. On the other hand, if Tata Steel declines below ₹579, it can come under pressure in the near term. Such a fall can drag the stock lower to ₹550 or even lower levels. Investors can hold the long positions. Revise the stop-loss higher to ₹575.

Published on August 13, 2017
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