Technical Analysis

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

GURUMURTHY K | Updated on March 09, 2018 Published on September 04, 2016






Tata Steel can find support (₹373.7)

Tata Steel was range-bound between ₹367 and ₹381 in the past week. The 21-day moving average at ₹378 and the next resistance at ₹382 are capping the upside for the stock in the near term. A decisive break above ₹382 is required to mitigate chances of a further fall. The immediate targets above ₹382 are ₹390 and ₹395. A strong weekly close above ₹395 will indicate the beginning of a fresh rally to ₹430 levels. But as long as the stock trades below ₹382, it will be under pressure and can break below the support at ₹367. Such a break can take it lower to ₹362. Further break below ₹362 can drag it to ₹358 or ₹355. The broad region between ₹355 and ₹345 is a strong support zone which includes the neckline support. So, the downside in the stock is more likely to be limited to this support zone. Medium-term investors can continue to hold the longs. Accumulate longs near ₹355 if the stock breaks below ₹367. Retain the stop-loss at ₹310.

RIL to test its trend deciding support (₹1,012.8)

It was a volatile week for RIL. The stock surged, breaking its resistance at ₹1,045 and made a high of ₹1,073 on Wednesday. But it failed to sustain the rally and sharply reversed lower, giving back all the gains to close 1.4 per cent lower. The crucial support in the ₹1,000-₹985 region can be tested in the initial part of this week. Whether the stock breaks below ₹985 or reverses higher from the support zone will decide the next move. A strong break below ₹985 will take it lower to ₹970 which is its next important trend line support. Further break below ₹970 will increase the downside pressure and drag it ₹950 or ₹940. On the other hand, if RIL manages to reverse higher from ₹1,000 or ₹985, it can move up to ₹1,035 or ₹1,045. Short-term investors can wait for dips and go long after a bounce from ₹985. Stop-loss can be placed at ₹960 for the target of ₹1,040. The level of ₹1,045 will continue to remain a strong resistance.

Infosys range-bound with a bearish bias (₹1,031)

The 21-day moving average at ₹1,047 continues to cap the upside in Infosys for the second consecutive week. The weekly candle stick chart suggests a sideways consolidation between ₹1,010 and ₹1,060. A breakout on either side of this range will decide the next leg of move. From the charts, the resistance at ₹1,060 looks strong. So, there is a strong likelihood of the stock breaking below ₹1,010. Such a break will increase the danger of the stock falling below the psychological ₹1,000 mark for the first time since July 2015. Such a fall will see Infosys tumbling to ₹927or ₹913 — the 50 per cent Fibonacci retracement level. If the stock manages to rise past ₹1,060, a corrective rally to ₹1,070 or ₹1,080 is possible. A strong break and a decisive close above the 21-day moving average will be the first sign of relief for the stock. Such a break will increase the chance of the stock breaking the range and rallying above ₹1,060 to the above mentioned targets.

ITC gains momentum (₹262.4)

After seven weeks of sideways move, ITC is showing signs of breaking the ₹245-₹262 range on the upside. The stock rose 3.4 last week and closed on a strong note above a key resistance at ₹255. A rise to test the next resistance at ₹266 is likely this week. A break above it can take ITC higher to ₹270. If the stock manages to rise past ₹270, then a fresh rally to ₹290 or ₹293 can be seen over the medium term. But a reversal from ₹266 can trigger a fall to ₹260, ₹258 or even ₹256. It will also increase the danger of the stock revisiting ₹250 levels. Key support is at ₹256. A break below it can drag the stock back to ₹250 levels. Medium-term investors can hold the long positions. Revise the stop-loss higher to ₹245 from ₹228 for the same target of ₹270. Move the stop-loss higher to ₹260 if the stock moves up to ₹266. The 55-day moving average is at ₹249. The stock will come under pressure only if it declines below this support.

Bullish view intact for SBI (₹254.3)

The 100-week moving average support at ₹246 halted the corrective fall in SBI last week. The stock made a low of ₹244.5 and reversed sharply to close 3 per cent higher for the week. The bullish outlook is intact. A rise to test the immediate resistance at ₹260 looks likely. Inability to break above ₹260 can keep SBI in a sideways range between ₹245 and ₹260 for some more time. On the other hand, a strong break above ₹260 can take it to the next key resistance at ₹264 — the 61.8 per cent Fibonacci retracement level. But this resistance is less likely to hold and halt the rally. Further break above ₹264 can target ₹275 or even higher levels. Medium-term investors can hold the longs and accumulate on dips near ₹240 and ₹235 if the stock breaks below ₹245. Retain the stop-loss at ₹205. The near-term outlook will turn negative only if SBI falls below the 21-day moving average support at ₹245. The next targets will be ₹240 and ₹235.

Published on September 04, 2016
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