Technical Analysis

Up-move gains momentum in SBI (₹298.6)

| Updated on August 06, 2018 Published on August 05, 2018

SBI (298.6)

SBI surged over 4 per cent, breaking and closing decisively above the key resistance level of ₹287. The rally in the stock over the last couple of weeks has strengthened its upmove. The region between ₹285 and ₹287 will now act as a strong support. The outlook will turn negative only if the stock declines below ₹285. Such a fall can drag the SBI stock to ₹280 or even lower. But the bias is bullish on the chart. SBI is likely to sustain above ₹285 and move up to ₹310 initially and then to ₹322 over the short term. The region around ₹322 is a crucial resistance. Inability to breach this hurdle can trigger a pull-back move to ₹310 or ₹300. But a strong break above ₹322 will increase the likelihood of the stock targeting ₹350 or even ₹375 over the medium term. Traders with a medium-term perspective can go long at current levels and also accumulate on dips at ₹295, ₹292 and ₹289. Keep the stop-loss at ₹278 for the target of ₹345. Revise the stop-loss higher to ₹283 as soon as the stock moves up to the level of ₹310.

ITC (₹303.7)

ITC was stuck in a sideways range between ₹295 and ₹305 last week. Though the broader bullish outlook remains intact, the near-term view is mixed. Support is at ₹295 and resistance is at ₹308. A range-bound move between ₹295 and ₹308 is possible for some time. A breakout on either side of ₹295 or ₹308 will then decide the next move. A break below ₹295 can extend the down-move to ₹290 or ₹285. Further fall below ₹285 is unlikely, as fresh buying interest is likely to emerge in the ₹285-290 region. As such, an eventual break above ₹308 will take the stock higher to ₹318. Further break above ₹318 will increase the likelihood of the stock reaching ₹360 over the medium term. Investors can hold their long positions with a revised stop-loss at ₹240. Short-term traders who have taken long positions at ₹297 can hold it and accumulate on dips at ₹293 and ₹288 levels. Stop-loss can be placed at ₹281 for the target of ₹330. Revise the stop-loss higher to ₹303 as soon as the stock moves up to ₹310 level.

Infosys (₹1,364.1)

Infosys fell sharply by about 3 per cent initially, but managed to recover in the later part of the week. Resistance is at ₹1,390. A strong break above it is needed for the uptrend to resume. Such a break can take the stock higher to ₹1,435 initially. Further break above ₹1,435 will then pave the way for our long-term targets of ₹1,450 and ₹1,470. But as long as the stock remains below ₹1,390, a range-bound move between ₹1,335 and ₹1,390 can be seen for some time. The 21-day moving average at ₹1,339 and a trendline at ₹1,335 are the crucial short-term supports. These supports have been limiting the downside in the stock since April. The short-term view will turn negative only if Infosys declines below ₹1,335 decisively. In such a scenario, a corrective fall to ₹1,310 is possible. Further break below ₹1,310 can drag the stock lower to ₹1,290 or even lower on the back of profit booking over the short term. Both medium- and long-term investors who are holding long positions should look to book partial profits at ₹1,450.

RIL (₹1,176.7)

RIL surged, breaking above the key resistance level of ₹1,140, as expected last week. The stock rallied over 6 per cent intra-week to make a high of ₹1,202.95. However, it has come off from those levels, giving back some of the gains, and closed 4 per cent higher for the week. Near-term supports are at ₹1,145 and ₹1,138. The short-term view will turn negative only if RIL declines below ₹1,138 decisively. In such a scenario, a corrective fall to ₹1,100 is possible on the back of profit-booking. Further break below ₹1,100 will increase the likelihood of the corrective fall extending to ₹1,065 or even ₹1,050 thereafter. But such a fall below ₹1,100 looks unlikely, as fresh buyers are likely to emerge at lower levels. A strong break and a decisive close above ₹1,200 will boost the momentum. Such a break can take RIL higher to ₹1,250 and ₹1,300 thereafter. Short-term traders can go long on dips at ₹1,160 and ₹1,145. Stop-loss can be placed at ₹1,085 for the target of ₹1,300. Revise the stop-loss higher to ₹1,175 as soon as the stock moves up to ₹1,210.

Tata Steel (₹555.1)

Tata Steel was range-bound last week. The immediate outlook is mixed. Support is at ₹535 (100-week moving average) and resistance is at ₹575 (21-week moving average). The Tata Steel share can remain range-bound between ₹535 and ₹575 for some time. A breakout on either side of ₹535 or ₹575 will then decide the next move. A strong break above ₹575 will ease the downside pressure. Such a break will trigger a relief rally to ₹600 or even ₹620 on the back of short-covering. On the other hand, if Tata Steel breaks below ₹535, ₹500 and ₹490 levels can be revisited. Further break below ₹490 can take the stock to ₹475 and ₹470 thereafter. The region between ₹470 and ₹475 is a crucial long-term support and the price action around this region will need a close watch. Those with short positions at ₹525 and ₹540 can hold them. Retain the stop-loss at ₹570 for the target of ₹475. Revise the stop-loss lower to ₹510 as soon as the stock moves down to the level of ₹495.

Gurumurthy K

Published on August 05, 2018
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