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

Tata Steel is range bound (₹385.1)

The ₹380-₹440 sideways range remains intact in Tata Steel. Within this range, the stock fell almost 10 per cent last week to close just above the lower band. If the stock manages to sustain above ₹380, the range bound move can continue for some more time. In such a scenario, a rise to ₹400 and ₹440 — the upper end of the range is possible. But if the stock declines below ₹380, it can fall to ₹360 or ₹350. A cluster of supports around ₹350 reduces the possibility for a fall below this support level. The broader view continues to remain bullish. An eventual break above ₹440 will see Tata Steel moving higher to ₹485 and ₹490. Further break above ₹490 may take the stock higher to ₹535 thereafter. Short-term investors holding long positions at ₹400 can hold it with a stop-loss at ₹365 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.

Immediate outlook is unclear for SBI (₹275.7)

SBI traded on a mixed note. After marking a high of ₹285 of Monday, the stock fell and remained range-bound for the rest of the week. The immediate outlook is not clear. Near-term support is at ₹264 which can be tested this week. If SBI manages to sustain above this support, a range-bound move between ₹265 and ₹285 or ₹290 is possible for some time. But if the stock declines below ₹264 decisively, it can test ₹260 . Further break below ₹260 will increase the likelihood of a short-term corrective fall to ₹245 or ₹240. This will be a good opportunity to buy the stock as the overall picture remains bullish. Also, the key support at ₹235 is likely to limit the fall in the short term. A strong break above ₹290 will boost momentum and take SBI higher to ₹305 or ₹310. It will also increase the possibility of the stock testing the crucial resistance at ₹327. Medium-term investors can hold the longs with the revised stop-loss at ₹220. Move the stop-loss higher to ₹240 as soon as the stock rises to ₹300.

RIL to remain under pressure (₹987.5)

RIL failed to sustain above the psychological ₹1,000 mark and fell 1.4 per cent in the past week. The stock has been tumbling continuously over the last six weeks. The outlook is negative. Immediate resistance is at ₹1,000 and then a strong resistance lies between ₹1,020 and ₹1,030. The outlook will turn positive only if the stock manages to rise past ₹1,030 decisively. Such a break will ease the downside pressure and boost the momentum to test ₹1,100 levels once again. But such a strong rally looks less probable at the moment. RIL is more likely to extend the down-move in the coming weeks. It is expected to inch lower towards ₹950 in the coming weeks. It will also increase the likelihood of the stock revisiting ₹930 or even ₹920 levels thereafter. The level of ₹920 is a strong support for the stock. The possibility of the stock reversing higher from this support cannot be ruled out. Such a reversal will be a good opportunity for medium-term investors to take long positions in the stock.

Downtrend is intact in Infosys (₹919.8)

Within its overall downtrend, Infosys consolidated in a sideways range last week. The 200-week moving average at ₹950 capped the upside in the stock as expected. Infosys made an intraweek high of ₹957 and then reversed lower. A fall to test ₹900 is possible . If the stock reverses higher from ₹900, a range-bound move between ₹900 and ₹950 can be seen for some time. If it manages to rise past ₹950, the rally can extend to ₹1,000. However, the broader view continues to remain bearish and upside is expected to be capped. There is a strong likelihood of the stock eventually breaking below ₹900 in the coming days. This can drag it to ₹850 initially and then to ₹825 or ₹800 . However , the level of ₹800 is a strong long-term support . The current downtrend is likely to halt at around ₹800 in the coming weeks. A strong reversal from ₹800 will signal the beginning of a fresh long-term upmove in Infosys. Long-term investors can wait for the fall to buy the stock at ₹800 levels .

Outlook turns bearish for ITC (₹227.9)

The short-term outlook has turned bearish for ITC. The stock tumbled over 6 per cent in the past week and is down 8.5 per cent over the last couple of weeks. Near-term resistance is at ₹235, which is likely to cap the upside. Immediate support is at ₹225 and then at ₹222 — the 50 per cent Fibonacci retracement support. The price action in the last two weeks suggests that the stock is likely to break below these supports in the coming days. Such a break can take the stock lower to ₹210 or even ₹205 in the short term. ITC has been broadly range-bound between ₹180 and ₹275 since late 2012. The reversal in ITC from its September high of ₹266 is very significant as this has kept its broader long-term sideways move intact. The possibility of the stock extending its fall to test the level of ₹200 or even ₹190 in the coming weeks cannot be ruled out. The price action in the coming days will need a close watch as it may confirm this extended fall to the levels of ₹200 or ₹190.

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