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RIL was volatile last week and finished declining by Rs 10. On Friday, the stock tested its immediate significant resistance level of Rs 965 and reversed lower forming a bearish engulfing pattern that indicates short-term reversal. With this decline, the stock appears to have resumed its short-term downtrend that commenced from its April 1 peak of Rs 1065.
Short-term traders can initiate fresh short positions with stop loss at Rs 955. Downside targets are Rs 920 and then Rs 900. We re-state that a strong tumble below its medium-term support zone between Rs 880 and Rs 900 will pull the stock down to Rs 825 or Rs 740 in the months ahead.
On the other hand, strong breach of Rs 965 level can be a sign that the stock can move higher. It can then gradually rally to Rs 982 or Rs 1000 in the coming trading sessions.
State Bank of India (Rs 2312.8)
As expected, the stock reversed upwards from the key support level of Rs 2200 and achieved our price targets of Rs 2300 and Rs 2350 last week. SBI has surged 3.5 per cent in the previous week.
However, the stock is currently testing resistance level Rs 2350; its next resistance is at Rs 2400. Failure to move above Rs 2400 will indicate weakness and traders can exit long position and consider initiating short position with stiff stop loss.
The stock can decline to Rs 2250 and then to Rs 2200 or Rs 2150 in the ensuing trading sessions.
If the support band between Rs 2150 and Rs 2200 holds, the stock can move sideways in the wide range of Rs 2150 and Rs 2400 in the short term. Strong dive below Rs 2150 will be resumption of the downtrend and the stock can decline to Rs 2000 in the medium term. Next important resistance is at Rs 2500.
Tata Steel (Rs 573.5)
Tata steel failed to move above Rs 595 and slipped lower forming a bearish engulfing candlestick pattern on June 1. The stock retreated 2 per cent last week.
In the short-term, the stock can stay wavering between Rs 560 and Rs 600. Short-term traders can initiate fresh short position in rallies with stop loss at Rs 590.
Initiate target is Rs 560. Fall below this level can drag the stock down to Rs 540 and then to Rs 520 in the forthcoming weeks.
Nevertheless, strong breach of Rs 600 will pave way for the stock heading higher to Rs 620 and then to Rs 640, which is a significant medium-term resistance. Medium-term trend is down since this January. Only an emphatic jump above Rs 640 will mitigate this downtrend.
Infosys (Rs 2813.5)
Infosys hovered in the range between Rs 2750 and Rs 2850 and finished the week by advancing Rs 25. Traders with short-term perspective should be watchful as long as the stock's immediate support of Rs 2750 holds.
Dive below this support can drag the counter lower to Rs 2700 and then to Rs 2650 in the upcoming weeks.
A move above Rs 2850 will encounter resistance at Rs 2900 levels. Subsequent important resistances are at Rs 2,950, Rs 3,000 and Rs 3,125.
Medium-term trend is down for the stock since its January peak of Rs 3493 levels. Only a strong move above Rs 3200 will mar this downtrend.
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