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.

Published on July 17, 2016
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