Technical Analysis

Weekly Trading Guide

| Updated on March 04, 2018 Published on March 04, 2018

SBI (262.5)




The resistance at ₹281 has held very well. SBI reversed sharply lower after testing this hurdle to close 5 per cent lower last week. This fall marks the resumption of the overall downtrend that has been in place since last November. The immediate resistance at ₹271 can cap the upside in the near term. A break above it, though unlikely, can take the stock higher to ₹281 again. Though the 200-week moving average support is near current levels at ₹260, SBI is vulnerable to break below it and fall further to test the next support at ₹257. Further break below ₹257 will drag the stock lower to ₹251or even lower in the short term. Cluster of supports are poised inbetween ₹250 and ₹245. Whether the stock manages to reverse higher from this support zone or not will be key in deciding the next trend. Short-term traders with high risk appetite can go short on rallies at ₹265 and ₹269. Keep the stop-loss at ₹275 for the target of ₹252. Revise the stop-loss lower to ₹260 as soon as the stock moves down to ₹257.

ITC (₹263.6)

ITC fell 2 per cent last week, wiping out all the gains made in the week earlier. The stock now hovers above a key support level of ₹262. If ITC manages to sustain above this support, a bounce back move to ₹270 or ₹271 can be seen. A break above ₹271 will see the upmove extending towards ₹275. A range-bound move between ₹260 and ₹275 is possible for some time in such a scenario. On the other hand, if ITC declines below the immediate support ₹262, the current downmove can extend towards ₹259 or even ₹257. As being reiterated in this column over the last few weeks, the region between ₹260 and ₹257 is a crucial and trend deciding support zone for ITC. The outlook for the stock will turn negative if it breaks below ₹257 decisively. Such a break will increase the likelihood of the stock falling towards ₹250 or even lower levels thereafter. However, the bias remains positive for the stock to sustain above ₹257. Investors can hold the long positions and accumulate at ₹260. Retain the stop-loss at ₹220.

Infosys (₹1,160.2)

Infosys was volatile last week. It fell initially to a low of ₹1,125.8 and reversed sharply to make a high of ₹1,189. The stock fell again, giving back some of the gains and closed the week on a flat note. The weekly candle reflects indecisiveness in the market. Though the broader bullish view remains intact, the immediate outlook is unclear for the stock. Immediate resistance is at ₹1,170. A strong break above it can boost the momentum and take the stock higher to ₹1,200 in the short term. But if the stock fails to bounce from the current levels, it can fall towards ₹1,143. A break below ₹1,143 can drag the stock lower towards ₹1,135 or even ₹1,130. The 21-day moving average and a trendline support at ₹1,130 can limit the downside in the near term. A bounce from ₹1,130 can keep the stock in a sideways range between ₹1,130 and ₹1,170 for some time. But if Infosys breaks below ₹1,130, it can come under more selling pressure. Such a break can drag it towards ₹1,100. Both long and medium-term investors can hold the long positions.

RIL (₹947.7)

RIL extended its up-move for the third consecutive week. The stock was up 1.5 per cent and has surged 5.5 per cent over the last three weeks. It tested the key resistance level of ₹960 last week and has come-off slightly from there. Whether the stock remains below ₹960 or breaks above it will decide the next move. If RIL manages to surpass this hurdle at ₹960, the current uptrend can gain momentum. In such a scenario, the stock can rally further towards ₹1,000 or ₹1,005 in the coming weeks. On the other hand, if the stock remains below ₹960, it can fall to test the ₹930-₹920 support cluster. The 55-, 21- and the 100-day moving averages are poised inbetween ₹930 and ₹920. A bounce from this support zone can take the stock higher towards ₹960 again. But a strong break below ₹920 will increase the downside pressure. Such a break can drag the stock lower towards ₹900 or even ₹885 in the coming weeks. Traders can stay out of the market for a while until a clear trend and trade signal emerges.

Tata Steel (₹675.3)

The resistance at ₹692 has capped the upside in Tata Steel for the second consecutive week. The stock tested this support and has come-off to close on a mixed note. The weekly candle reflects indecisiveness in the market and leaves the immediate outlook unclear. As long as the stock remains below ₹692, there is a strong likelihood of it falling towards ₹650 or even ₹640. Strong support is in between ₹640 and ₹630, which can limit the downside. Further fall below ₹630 is less likely as fresh buying interest may emerge at lower levels. An upward reversal from this support zone will take the stock higher towards ₹680 and ₹690 once again. A strong break above ₹690 will boost the momentum. Such a break will pave way for a revisit of ₹750. A strong break above it will increase possibility of the stock targeting ₹850 or ₹900 over the medium-term. Investors hold the long positions and accumulate on dips at ₹645 and retain the stop-loss at ₹630.

Published on March 04, 2018
This article is closed for comments.
Please Email the Editor