Technical Analysis

Bellwethers: SBI, ITC, Infosys, Reliance, Tata Steel

Gurumurthy K | Updated on January 08, 2018

SBI (₹242.5)

SBI tumbled 4 per cent last week. The gap-down open on Wednesday, coupled with a weekly close below the key support level of ₹244, has turned the outlook bearish for the stock. Key resistances at ₹245, ₹247 and ₹249 can cap the upside in the short term, as fresh sellers may emerge at higher levels. A fall to ₹232 — the 50 per cent Fibonacci retracement support or even ₹226 — a key trend support is likely in the short term. As reiterated over the last few weeks, a strong break and close below ₹232 will increase the possibility of the stock tumbling to ₹200 or ₹190 over the medium- to long-term. Traders can make use of rallies to initiate short positions at ₹245. Accumulate shorts at ₹248. Stop-loss can be placed at ₹252 for the target of ₹233. Revise the stop-loss lower to ₹241 when the stock moves to ₹237. The downside pressure will ease only if the stock breaks above ₹249. Such a break can take the stock higher to ₹257 or ₹260. But, such a strong up-move looks unlikely at the moment.

ITC (₹269.6)

ITC managed to break above the key ₹269-₹270 resistance zone last week, but failed to sustain higher. It made a high of ₹271.25 and has come off slightly from there to close just below ₹270. Whether the stock sustains above ₹269 or not will decide the next move. A fall below ₹269 can take the stock lower to ₹265 or ₹264. Further break below ₹264 can drag the stock lower to ₹260 or even ₹257. A bounce from ₹257 can keep the stock range-bound between ₹257 and ₹270. But a fall below ₹257 can target ₹252 or ₹250. But if ITC manages to sustain above ₹269 and breaks above ₹270 again, it can ease the downside pressure and increase the likelihood of the stock rallying to ₹280. Further break above ₹280 can target ₹285 or even ₹290. Short-term traders with a high-risk appetite can go long at ₹272 after the stock breaks above ₹270. Stop-loss can be placed at ₹268 for the target of ₹280. Revise the stop-loss higher to ₹274 as soon as the stock rallies to ₹276.

Infosys (₹927.1)

The 100-day moving average resistance at ₹943 capped the upside in Infosys for the second consecutive week. Key near-term supports are at ₹919 and then in the ₹916-₹915 zone. Though a test of these levels cannot be ruled out in the near term, an immediate break below ₹915 is less probable. An upward reversal thereafter can take the stock higher to test the key short-term resistance levels of ₹940 and ₹945 again. A strong break and a decisive close above ₹945 will pave way for a fresh rally to ₹960. Further break above ₹960 will increase the likelihood of the up-move, extending to ₹985 or even to ₹1,000 levels thereafter. Investors can hold the long positions. On the other hand, if Infosys breaks below ₹916, it can fall to ₹910 initially. Further break below ₹910 will increase the likelihood of the downmove extending to ₹900. The level of ₹900 is a key short-term support. A strong break below it seems likely and can drag it to ₹865 or ₹860.

RIL (₹910.3)

RIL rose, breaking above the crucial resistance level of ₹894 last week. The stock was up 3.8 per cent and has surged over 16 per cent over the last three weeks. The outlook is bullish. The support in the ₹894-900 zone can limit the downside in the near term. Resistance is in the ₹925-927 band, which is likely to be tested as long as RIL stays above ₹900. Inability to break above ₹927 can pull the stock lower to ₹900 and keep it range-bound between ₹900 and ₹927 for some time. But if RIL manages to break above ₹927 decisively, it can regain momentum. It will also increase the likelihood of the current rally extending to ₹950 or ₹952. Short-term traders can buy on dips at ₹895 and ₹900. Stop-loss can be placed at ₹860 for the target of ₹950. Revise the stop-loss higher to ₹910 as soon as the stock moves up to ₹925. The level of ₹885 is a key short-term support. The outlook will turn negative for a fall to ₹840 only if the stock declines decisively below ₹885.

Tata Steel (₹704.4)

After surging for two consecutive weeks, Tata Steel witnessed a slight pull-back in the past week. Immediate resistance is at ₹712. Inability to break above this level can pull the stock further lower to ₹690 initially. Further break below ₹690 will increase the likelihood of the downmove extending to ₹685 or ₹679. An immediate break below ₹679 looks less likely at the moment. An upward reversal thereafter can take the stock higher to ₹715 and ₹720 levels again. Investors who had taken long-positions last week can accumulate on dips at ₹695 and ₹685. Retain the stop-loss at ₹630. Resistance is at ₹725 which, if broken, can take Tata Steel to ₹740 or ₹750. A strong break and a close above ₹750 will increase the likelihood of the stock targeting ₹850 or even ₹950 in the long run. The short-term view will turn negative only if the stock breaks below the 21-day moving average support level of ₹679. The next target is ₹650.



Published on October 22, 2017

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