Technical Analysis

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

Gurumurthy K | Updated on January 17, 2018 Published on July 23, 2016

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SBI (₹223.45)



SBI fell 3.5 per cent last week, giving up most of the gain made in the week earlier. The stock has closed just above the 21-day moving average support at ₹223. A bounce back from the current levels can take the stock up to ₹235. A range-bound move between ₹223 and ₹235 is possible for some time. But a break below ₹223 can drag the stock lower to ₹218 — an important short-term support for the stock. An immediate break below this support looks less likely. A reversal from ₹218 will mark the resumption of the overall uptrend that has been in place since February. The level of ₹235 is an important resistance. A strong break above it can take SBI higher to ₹242 and ₹245 initially. Further break above ₹245 will open doors for the targets of ₹250 and ₹255 in the short term and ₹265 over the medium term. Short-term traders who have taken long positions near ₹227 can hold it with the same stop-loss at ₹218 for the target of ₹250. Medium-term investors can accumulate longs at current levels while retaining the stop-loss at ₹199 for the target of ₹255.



ITC (₹249.55)



ITC continued to trade mixed and range-bound for the second consecutive week. The view remains the same. The short-term outlook will remain positive as long as ITC trades above ₹240. The 21-day moving average support is near the current levels at ₹246, which has been limiting the downside in the stock over the last couple of weeks. A break below it can take the stock lower to ₹240. An immediate fall below ₹240 looks less likely. So dips to ₹246 and ₹240 will be a good buying opportunity. The possibility of the stock trading range-bound between ₹240 and ₹260 for sometime cannot be ruled out. The bias will remain positive within this range for a strong break above ₹260. This can take ITC to ₹268 and ₹270 initially. Further break above ₹270 will see the stock extending its rally to ₹290. Medium-term investors who have taken long positions near ₹245 can accumulate near ₹241 if the stock falls below ₹246. Retain the stop-loss at ₹228 for the target of ₹270. The downside in the stock could be limited to ₹235 or ₹230 even if it declines below ₹240.



Infosys (₹1,072.65)



After tanking 9 per cent in the week earlier, Infosys has managed to sustain above its crucial support at ₹1,050 in the past week. The candle stick on the weekly chart reflects indecisiveness. But lack of fresh buying interest, visible from the daily chart, keeps the chances alive for the support at ₹1,050 to be tested and broken in the coming days. A strong break below ₹1,050 can drag the stock lower to ₹1,000 initially. It will also confirm the reversal of the long-term uptrend that has been in place since 2013. Further fall below ₹1,000 will see Infosys tumbling to ₹915 where both the 200-week average as well as the 50 per cent Fibonacci retracement support is poised. On the other hand, if Infosys manages to sustain above ₹1,050, it can remain range-bound between ₹1,050 and ₹1,100 for some time. The resistance at ₹1,150 is a key level, which has to be breached to ease the downside pressure. However, the threat will completely be wiped out only on a strong surge above the level of ₹1,200, which looks unlikely at least in the short term.



RIL (₹1,014.80)



Barring a brief dip to a low of ₹986.1 on the first trading of the week, RIL managed to trade above the psychological ₹1,000 level all through the week. Inability to sustain the break below ₹1,000 suggests that fresh buying interest is emerging in the stock at lower levels. As such, the strong support in the ₹1,000-₹985 zone is likely to limit the downside in the short term. There is no threat for a fresh fall as long as the stock trades above this support zone. Resistance is at ₹1,030, a strong break above which can take the stock higher to ₹1,045 and ₹1,050 in the near term. A strong break above ₹1,050 will open doors for the next short-term targets of ₹1,070 and ₹1,100. Investors with a short-term view can buy on dips near ₹1,000. Stop-loss can be placed at ₹975 for the target of ₹1,060. Revise the stop-loss higher to ₹1,015 as soon as the stock moves up to ₹1,045. The stock will come under pressure if it breaks decisively below ₹985. Such a break will increase the possibility of a fall to ₹950. Only a strong break below ₹950 will turn the outlook bearish for the stock.



Tata Steel (₹365.3)



Tata Steel paused in the past week after skyrocketing 17 per cent the week earlier. The stock made a high of ₹379.25 on Monday and reversed lower from there to close 2 per cent lower for the week. Immediate resistance is at ₹370. The inability to break above this resistance can take the stock further lower to ₹350 in the near term. The 200-week moving average at ₹353 and a trend line as well as the 38.2 per cent Fibonacci retracement support at ₹348 can limit the downside in the stock and keep the overall uptrend in tact. A reversal from the above-mentioned supports can trigger a fresh rise, breaking above the immediate resistance at ₹370 to test the next key 50 per cent Fibonacci resistance at ₹387. Further break above ₹387 will see Tata Steel extending its rally to ₹400 or even ₹430 there after. Medium-term investors can hold the longs. Revise the stop-loss higher to ₹310 from ₹285. The short-term outlook will turn negative only if the stock declines below ₹348 decisively. But such a break looks less probable at the moment.



Published on July 23, 2016
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