Technical Analysis

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

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






SBI (₹231.5)

The uptrend in SBI remains intact and is gaining momentum. The stock surged 6 per cent last week and has decisively closed above the resistance at ₹226. This level will now act as a good near-term support . Below this level, the 21-day moving average at ₹220 and a trend line at ₹217 are key short-term supports that can limit the downside in case of a corrective fall. A rise to ₹247 — the 100-week moving average resistance looks likely in the near term. Inability to break above this hurdle can trigger an intermediate corrective fall to ₹230 and ₹225. But a strong break above ₹247 can take it higher to ₹252 and ₹255. Further break above ₹255 can take SBI higher to ₹260 and ₹265 over the medium term. Short-term traders go long on dips near ₹227. Stop-loss can be placed at ₹218 for the target of ₹250. Medium-term investors who have taken long positions a couple of weeks back can continue to hold it. Retain the stop-loss at ₹199 for the target of ₹255. Accumulate long positions on dips near ₹227.

ITC (₹248.9)

ITC was stuck inside a narrow range between ₹245 and ₹253 last week. Lack of fresh selling interest in the stock after the 3 per cent fall on July 4 is helping it sustain above the ₹245-₹240 support zone. The short-term outlook will remain positive as long as ITC trades above ₹240. However, there is a strong likelihood of the stock remaining range-bound between ₹240 and ₹260 before we see a sharp rally. The 21-week moving average is on the verge of crossing over the 100-week moving average. It indicates the possibility of a break above ₹260. Hence, dips to ₹245 and ₹240 will be a good buying opportunity. A strong break above ₹260 can take it to ₹268 and ₹270 initially. Further break above ₹270 will see the stock extending its rally to ₹290. Investors with a medium-term perspective can make use of dips to go long near ₹245 and accumulate near ₹241. Stop-loss can be placed at ₹228 for the target of ₹270. The downside in the stock could be limited to ₹235 and ₹230 even if it declines below ₹240.

Infosys (₹1,072.25)

Infosys tanked 9 per cent on Friday, breaking below the important 200-day moving average support at ₹1,148 on disappointing first quarter results. It is now poised near a very crucial support at ₹1,050. Whether it manages to sustain above this level or not will decide the move for the next few weeks. The price action in the coming weeks will need a close watch as last week’s fall is posing a threat to the stock’s long-term uptrend that has been in place since May 2013. A strong weekly close below ₹1,050 will confirm the trend reversal . In such a scenario, a fall to ₹1,000 initially is possible. Further break below ₹1,000 can drag Infosys lower to ₹930 or ₹910 . On the other hand, if Infosys manages to sustain above ₹1,050, it can slowly bounce back to ₹1,100 and ₹1,150 . In such a scenario, the stock can remain range-bound between ₹1,050 and ₹1,150 for some time. The level of ₹1,150 will now be a crucial resistance which has to be breached to ease the downside pressure.

RIL (₹1,012.55)

The ten-week long sideways consolidation between ₹925 and ₹1,000 has come to an end. The stock has closed decisively above the psychological ₹1,000 mark, thereby turning the outlook bullish. The company’s results which were released after the market close on Friday, beat market expectations. This may add strength to the current up-move and push the stock higher. Strong support lies between ₹1,000 and ₹985 which can limit the downside . Only a strong fall below ₹985 will turn the short-term outlook negative. But such a fall looks less probable. The prolonged consolidation has formed a strong base below ₹1,000. This increases the possibility of the stock sustaining above the psychological ₹1,000 level going ahead. A rise to ₹1,050 and ₹1,070 is possible. A strong break above ₹1,070 will see the rally extending to ₹1,090 and ₹1,100. Short-term traders can go long. Stop-loss can be kept at ₹990 for the target of ₹1,060. Accumulate longs on dips near ₹1,000.

Tata Steel (₹372.85)

Tata Steel skyrocketed 17 per cent last week to a new 52-week high and closed on a strong note above the 200-week moving average at ₹353. The surge last week has confirmed the end of the corrective fall that was in place since the April high of ₹364.15. Technically, the 100-day moving average has halted the corrective fall. The uptrend that had begun from the February low of ₹211 remains intact and the rally last week marks the beginning of a fresh leg of up-move. Near-term supports are at ₹360 and ₹345. Immediate resistance is at ₹387 — the 50 per cent Fibonacci retracement level. Inability to break above this resistance may trigger a corrective fall to test ₹365-₹360 or even ₹350 . However, such a reversal may find fresh buying interest and limit the downside . An eventual break above ₹387 will see the stock rallying beyond ₹400 to the next target of ₹430. Medium-term investors can consider holding the longs and retain the stop-loss at ₹285.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on July 17, 2016
This article is closed for comments.
Please Email the Editor