Weekly Trading Guide

Pressure is mounting on SBI as it has been falling over the last couple of weeks. The stock has tumbled 7 per cent over the last two weeks, indicating that the downtrend is intact. The immediate support at ₹231 is likely to be tested in the coming days. A bounce from ₹231 can keep SBI in a sideways range between ₹230 and ₹260. But the price action and indicators on the chart suggest that SBI is vulnerable to decline below ₹231. The 100-day moving average is on the verge of crossing below the 200-day moving average. Similarly, the 21-week moving average has crossed below the 55-week moving average, indicating limited upside. The resistance at ₹250 can cap the upside. A strong break below ₹231 can take SBI lower to ₹220 or ₹215 initially. Further break below ₹215 will see the stock tumbling towards ₹190 over the medium term. Traders can go short at current levels and at ₹248. Stop-loss can be placed at ₹258 for the target of ₹205. Revise the stop-loss lower to ₹242 as soon as the stock moves down to ₹228.

ITC surged 5.8 per cent, breaking above the key resistance level of ₹266 in the past week. The strong rally has turned the short-term outlook positive. Immediate support is at ₹272 — the 200-day moving average and the next key support is at ₹268. These supports can limit the downside as dips to these levels are likely to bring fresh buyers into the market. The current up-move can extend to ₹282 in the coming days. A break above ₹282 will see the rally extending to ₹286 or ₹288. Short-term traders can go long on dips at ₹273 and can accumulate at ₹269. Stop-loss can be placed at ₹267 for the target of ₹285. Revise the stop-loss higher to ₹278 as soon as the stock moves up to ₹282. The bullish outlook will get negated only if ITC declines below ₹268 decisively. Such a break will increase the likelihood of the stock falling towards ₹263 or ₹261 again. But the pace of fall could be slow as a cluster of moving average supports are poised ₹266 and ₹263. Investors can hold the long positions and retain the stop-loss at the level of ₹220.

Though Infosys opened with a wide 70-point gap down last week, it managed to claw-back . The stock reversed sharply higher from its low of ₹1,099 and recovered all the losses. Technically, the psychological support level of ₹1,100 is continuing to hold well. The sharp bounce back from this support indicates the presence of fresh buyers at low levels. It also keeps the ₹1,100-₹1,200 sideways range intact. The stock has been stuck in this range since February. A breakout on either side of ₹1,100 or ₹1,200 will decide the next trend. The bias remains bullish for Infosys to breach ₹1,200 . Such a break can take the stock higher to ₹1,250 and ₹1,280. A strong break above ₹1,280 will then pave the way for the stock to target ₹1,350 or even higher levels over the medium term. On the other hand, Infosys will come under pressure only if it breaks below the ₹1,100-₹1,090 support zone. In such a scenario, a short-term corrective fall to ₹1,050 or ₹1,030 is possible. Medium- and long-term investors can hold the long positions.

RIL seems to be losing momentum after rallying for two consecutive weeks. The stock made a high of ₹948 and turned around giving back all the gains, and closed 1.2 per cent lower for the week. The broader ₹870-₹960 sideways range remains intact. The stock has been stuck in this range for a prolonged period of time. Immediate outlook is unclear. The cluster of supports in between ₹920 and ₹910 are likely to be tested in the near term. If RIL declines below the ₹910 level, it can fall to ₹890 or ₹880 again. On the other hand, if the stock manages to sustain above ₹910 and reverses higher, the downside pressure may ease. In such a scenario, the stock can move higher towards ₹950 or ₹960 once again. A strong break above ₹960 is needed for RIL to gain fresh momentum. Such a break will increase the likelihood of the stock rallying towards ₹1,000 and ₹1,025 levels thereafter. On the other hand, the outlook for the stock will turn bearish if it breaks below ₹870. Such a break can drag RIL lower towards ₹840 or even lower levels.

The relief rally in Tata Steel extended for the fourth consecutive week. The stock was up about 2 per cent last week. The 21-day moving average at ₹589 is providing strong support. The near-term will remain positive while the stock sustains above ₹600. An up-move to test the crucial ₹630-₹635 resistance region is likely in the short term. Whether Tata Steel breaks above this resistance region or not will determine the next leg of move. A strong break above ₹635 will see the corrective rally extending towards ₹650 or ₹655. But a pull-back move from the ₹630-₹635 resistance region can drag it to ₹615 or ₹600 again. The stock will come under renewed pressure only if it breaks decisively below the 21-day moving average support. Such a break can drag the stock towards ₹560 and ₹550. Traders with high-risk appetite can go long. Stop-loss can be placed at ₹585 for the target of ₹635. Revise the stop-loss higher to ₹612 as soon as the stock moves up to ₹622.

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