Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on June 25, 2018 Published on June 24, 2018

SBI (273.2)

Immediate outlook is mixed for SBI

SBI tumbled over 4 per cent intra-week to make a low of ₹265.8. However, it recovered some of the loss on Friday and closed 1.5 per cent lower for the week. The near-term outlook is mixed. Traders can stay out of this stock. Immediate resistance is at ₹275. As long as the stock remains below this hurdle, a fall to ₹265 or even ₹260 - the 21-week moving average support, is possible. On the other hand, if SBI breaks above ₹275, it can move up to ₹280 or even ₹285 in the coming days. Broadly, SBI can remain range-bound between ₹260 and ₹286 for some time. A breakout on either side of ₹260 or ₹286 will decide the next trend. A break below ₹260 can drag the stock lower to ₹255 or ₹250. But cluster of supports are poised between ₹264 and ₹260, which makes it a strong support region. This leaves the possibility high of the stock sustaining above ₹260 and breaking the range above ₹286. A strong break above ₹286 will ease the downside pressure and boost the momentum for a fresh rally to ₹300 or ₹310 thereafter.

ITC (₹265.1)

Resistances can cap upside in ITC

ITC fell to test ₹260 in the past week, as expected. The stock made a low of ₹260.15, but reversed sharply higher on Friday, recovering all the loss made during the week. However, the overall bearish outlook remains intact. Indicators on the charts are also negative. Key resistances are at ₹268 and ₹270, which are likely to be tested in the near term. However, a break above ₹270 looks less probable as fresh selling interest may emerge at higher levels. A fall to ₹258 is likely in the near term. A bounce from ₹258 can trigger a relief rally to ₹265 or ₹267. But a strong break below ₹258 will increase the likelihood of the fall extending to ₹252 or ₹250. Further fall below ₹250 is less likely. Investors can hold the long positions and accumulate at ₹255 and ₹252. Retain the stop-loss at ₹220. On the other hand, high risk appetite short-term traders can go short at current levels and at ₹267. Stop-loss can be placed at ₹270 for the target of ₹258. Revise the stop-loss lower to ₹263 as soon as the stock moves down to ₹261.

Infosys (₹1,246.4)

Infosys hovers above key support

Infosys reversed sharply lower and fell 2.6 per cent in the past week. A key near-term support is at ₹1,235. If Infosys manages to sustain above this support, a bounce-back move to ₹1,290 or ₹1,300 is possible. Inability to break above ₹1,300 can keep the stock range-bound between ₹1,235 and ₹1,300 for some time. On the other hand, if Infosys breaks below ₹1,235 in the coming days, it can fall further to ₹1,210 or ₹1,200 in the short term. Cluster of supports are poised between ₹1,200 and ₹1,180. There is a strong likelihood of fresh buyers emerging around this support region and restricting the downside. A bounce from the ₹1,200-1,180 support region will keep the overall uptrend intact. An eventual break above ₹1,300 will boost the momentum and take the stock higher to ₹1,350 or ₹1,370 thereafter. As being mentioned in this column over the last few weeks, the current uptrend in this stock is likely to target ₹1,450 over the long term. Both medium- and long-term investors can hold the long positions.

RIL (₹1,012.3)

Supports to limit the downside in RIL

RIL rose, breaking above the key resistance level of ₹1,023 last week, but failed to sustain higher. The stock made a high of ₹1,035.8 and reversed lower, giving back the gains made during the week. The weekly candle reflects indecisiveness in the stock. Inability to bounce-back above ₹1,023 again will leave the near-term outlook negative. As long as the stock remains below ₹1,023, the possibility is high of it breaking below the ₹1,000-₹995 support region. Such a break can the stock to ₹975 in the short term. Further break below ₹975 can drag it to ₹960. The region between ₹975 and ₹960 is a strong short-term support. A fall below ₹960 looks less likely at the moment. On the other hand, if RIL manages to bounce-back from the current levels itself or from the ₹1,000-995 support region and breaks above ₹1,023 decisively, it can gain strength. In such a scenario, the stock can rally to ₹1,045. Further break above ₹1,045 will boost the momentum and trigger a fresh rally to ₹1,110 over the medium term.

Tata Steel (₹560.4)

Resistances ahead for Tata Steel

Tata Steel fell, breaking below the crucial support level of ₹550 and made a low of ₹547.45 initially last week. Though it managed to reverse higher from this low, the bounce-back move lacks strength. Key resistance is in the ₹570-572 region. If Tata Steel manages to breach ₹572 decisively, the downside pressure will ease. Such a break will take the stock higher to ₹585 . Further break above ₹585 will pave way for the next targets of ₹600 and ₹610. As long as the stock sustains above ₹550, a range-bound move between ₹550 and ₹610 can be seen for some time. On the other hand, if Tata Steel fails to breach ₹572 in the coming days, there is a strong likelihood of it declining below ₹550. A crucial support is at ₹544 — the 21-month moving average. A decisive break below ₹544 will renew the pressure on the stock. Such a break will take it lower to ₹525 initially. Further break below ₹525 will then increase the possibility of the stock tumbling towards ₹500 and ₹480 over the medium term.

 

 

Published on June 24, 2018
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