Technical Analysis

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

GURUMURTHY K | Updated on January 20, 2018 Published on June 05, 2016






SBI lacks momentum to move past ₹200

SBI is unable to gain momentum to break above ₹200 decisively. It made a high of ₹207.95 last Wednesday, cooled off, and closed almost flat for the week. A decisive break and a close above ₹200 are needed for the stock to gain momentum. Resistance is at ₹204. A strong break above this hurdle can take SBI higher to test the resistance at ₹211 this week. If the stock manages to surpass ₹211, the rally can extend even to ₹217. On the other hand, if SBI fails to move above the psychological ₹200 level, it can remain under pressure. In such a scenario, the stock can move down to ₹192 or ₹189 initially. These supports are likely to halt the fall or trigger a reversal. Short-term traders can go long on a reversal from ₹189 with a stop-loss at ₹185 and for the target of ₹203. However, if SBI continues to decline below ₹189, it can then fall to ₹185 or even lower. But from the charts, a fall below ₹189 looks less probable.

ITC to test a key support in the near term

ITC fell about a per cent last week after a sharp 9 per cent rally the week before. The weekly candlestick reflects indecisiveness. A fall to an important support at ₹345 cannot be ruled out in the near term. Such a fall will be a good opportunity to initiate long positions, as a further decline below ₹345 looks less likely. ₹338 is an important support which is likely to limit the downside even if the stock declines below ₹345. A reversal from around ₹345 will keep the bullish outlook intact and take the stock higher to ₹360 once again. A strong break above ₹360 can take it to ₹365 initially. Further break above ₹365 can take ITC up to ₹380 over the medium term. Short-term traders and medium-term investors can make use of dips to go long near ₹345. Traders can place the stop-loss at ₹336 for the target of ₹365. Medium-term investors can keep the stop-loss at ₹320 for the target of ₹380.

Key resistance at ₹1,285 will decide Infosys’ move

Infosys extended its up move and closed in the green for the second consecutive week. It was up 1.6 per cent last week. The weekly chart is signalling a further rise in the coming days. But a key resistance is at the level of ₹1,285. A test of this resistance is possible in the near term. Whether the stock manages to rise past this level or not will decide the next move. A strong break above ₹1,285 can boost the momentum and take Infosys higher to the levels of ₹1,320 or ₹1,325. On the other hand, if the stock fails to break above ₹1,285 and reverses lower from there, the stock can fall to ₹1,250 or ₹1,240. Further break below the level of ₹1,240 can drag it to ₹1,220 or ₹1,200. The last three trading days, candlesticks suggest that the stock’s up-move lacks strength and there is a possibility for the resistance at the level of ₹1,285 to cap the upside. Traders can stay on the sidelines until a clear signal emerges.

RIL may be range-bound with a bearish bias

The Fibonacci resistance at ₹981 mentioned in this column last week has held up well. RIL made a high of ₹981.45 and has reversed sharply lower to close 1.5 per cent down for the week. Immediate resistance is at ₹962. Inability to move above this level can drag it further down to ₹948 or ₹945 in the coming days. If the stock continues to decline below ₹945, it can even target ₹930. The weekly chart suggests that the stock can remain range-bound between ₹930 and ₹980 for some time. A decisive breakout on either side of ₹930 or ₹980 will decide the next leg of move for RIL. However, the broader picture is weak with strong resistance around ₹1,000. This suggests that the upside in this stock is limited and the possibility of it breaking below the level of ₹930 is high. Such a break can take the stock lower to test the 200-week moving average at ₹906 in the coming weeks.

Tata Steel resumes its uptrend

Tata Steel extended its up move to close about 3 per cent higher for the week. Two consecutive weeks of positive close indicates the end of the corrective fall that was in place since the last week of April. Immediate support is at ₹337 and subsequent key supports are at ₹332 and ₹327, which may aid in limiting the downside for the stock in the short term. A rise to test the resistance at ₹355 looks likely in the short term. A strong break and a decisive weekly close above ₹355 can boost the bullish momentum. Such a break will confirm the beginning of a fresh leg of up-move in the stock. Tata Steel can then move higher to ₹387. Investors holding long positions can accumulate at current levels or if the stock dips to ₹332. Retain the stop-loss at ₹285. Short-term traders can make use of dips to go long near ₹332. Keep the stop-loss at ₹322 for the target of ₹352.

Published on June 05, 2016
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