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

Bullish outlook intact for SBI (₹272.9)

The support at ₹230 has held well in the past week for SBI. The stock fell sharply to record an intraweek low of ₹231 and surged to a high of ₹288.5 before closing at ₹272.9, up 12 per cent for the week. The stock has closed decisively above the 61.8 per cent Fibonacci retracement resistance at ₹264. The broader bullish outlook is intact. Supports are at ₹265-₹264 and ₹260, which can limit the downside in the near term. A sideways move between ₹265 and ₹290 or between ₹260 and ₹290 is possible in the near term. The bias will remain bullish and SBI is likely to break above ₹290 eventually. This can take the stock higher to ₹305 or ₹315 in the short term. It will also increase the medium-term possibility of it testing the key long-term trend resistance at ₹327. Medium-term investors can hold the longs. They can revise the stop-loss higher to ₹220. As soon as the stock moves up to ₹300, the stop-loss can be moved higher to ₹240. The level of ₹327 is a crucial resistance and will be significant in deciding the next leg of move.

Immediate outlook unclear for ITC (₹243)

ITC failed to sustain above its support at ₹247 and fell after making a high of ₹259.6. Immediate outlook is not clear. Further fall to test the key support at ₹235 cannot be ruled out in the near term. Whether the stock reverses higher from there or declines below it will then decide the next trend. A strong break below ₹235 can take the stock lower to ₹230 or even ₹225. But a reversal from ₹235 will ease the downside pressure. Such a reversal can take the stock higher to ₹245 or ₹250 initially. Further break above ₹250 will see the rally extending to ₹255 and ₹260 thereafter. The region between ₹260 and ₹265 is a key resistance for the stock. A strong break above ₹265 is needed for ITC to gain fresh bullish momentum. This will take it to ₹270 immediately. Further break above ₹270 will clear way for the next targets of ₹290 and ₹300. But inability to break above ₹265 can trigger a pull back move once again to ₹250 and ₹245. The stock can thus remain in a sideways range between ₹235 and ₹265 for a prolonged period of time.

Infosys may extend its downtrend (₹921.85)

Infosys continues to trade under pressure. The stock fell 5 per cent last week and has plummeted over 11 per cent over the past three weeks. The downtrend is intact. The bounce back after testing the psychological support at ₹900 lacks momentum. This is evident as the stock started to decline again from ₹965 on Thursday. This has increased the threat of the stock extending its fall and breaking below ₹900 in the coming weeks. The 200-week moving average around ₹948 may now act as a good resistance for the stock and cap the upside in the near term. Only a strong break and a decisive weekly close above ₹948 can ease the downside pressure. But such a strong rise looks less probable. Having said that, Infosys is more likely to fall to ₹850 or even ₹825-₹800 in the coming weeks. However, as mentioned last week, ₹825-₹800 is a strong long-term support zone and the current downtrend is more likely to halt there. A strong reversal thereafter may signal the beginning of a fresh leg of new long-term uptrend.

RIL faces resistance at around ₹1,025 (₹1,001.4)

It was a volatile week for RIL. The stock tumbled over 7 per cent intraweek to make a low of ₹932. However, it bounced back immediately, recovering most of the losses to close almost flat for the week. The daily chart suggests that the stock is facing resistance around ₹1,025 and a possibility of a fall to test ₹990 or ₹985 in the near term cannot be ruled out. If the stock manages to reverse higher from ₹985, a rally to ₹1,025 is possible. A strong break above ₹1,025 is needed for the stock to gain momentum. Such a break will ease the downside pressure and take RIL higher to ₹1,055 initially. Further break above ₹1,055 will see the stock targeting ₹1,075 or even ₹1,100. However, if the stock breaks below ₹985, it may continue to remain under pressure. In such a scenario, a fall to ₹950 and ₹930 is possible once again. The level of ₹930 is a strong 200-week moving average support which is likely to limit the downside in the stock. The stock is likely to reverse higher from this support and can move up to ₹1,000 levels once again.

Tata Steel is range bound with a bullish bias (₹426.8)

Amidst global volatility and turmoil in the group companies, Tata Steel continues to stay strong. The support at ₹380 has held well in the past week as well. Broadly, the stock has been consolidating sideways between ₹380 and ₹440 over the past five weeks. A breakout of this range will decide the next leg of move. Since the broader view is positive, there is a strong likelihood of the stock breaking above ₹440 in the coming days. Such a break can take the stock higher to ₹485 and ₹490. On the other hand, if the stock fails to break above ₹440, it may continue to remain range-bound between ₹380 and ₹440 for some more time. A break below ₹380 is unlikely, but if seen, can drag Tata Steel lower to ₹350. The long positions taken by the short-term investors at ₹400 can be retained with the same stop-loss at ₹365 and for the target of ₹465. Revise the stop-loss higher to ₹425 as soon as the stock moves up to ₹450. Medium-term investors can hold their longs with a stop-loss at ₹340.

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