Weekly Trading Guide

SBI opened the week on a negative note with a wide gap-down of ₹14 at ₹261.1. The stop-loss on the long positions recommended was hit. However, the stock managed to claw-back from the low of ₹261.1, recovering all the loss and closed on a positive note. The stock was up 5 per cent for the week. A crucial near-term resistance is at ₹294. Whether SBI breaks above this hurdle or not will determine the direction of the next move. Inability to breach ₹294 can pull the stock lower to ₹278 or ₹274 in the near term. A further break below ₹274 will then target ₹269. On the other hand, if SBI breaks above ₹294 decisively, it can gain strength. Such a break can take the stock initially higher to ₹310 and ₹312. A strong break above ₹312 will then pave way for the next target of ₹322 thereafter. Short-term traders can go long on a break above ₹294. Stop-loss can be placed at ₹282 for the target of ₹318. Revise the stop-loss higher to ₹301 as soon as the stock moves up to ₹307.

ITC broke below the key support level of ₹271 in the initial part of the week. However, negative sentiment was short-lived as ITC reversed sharply higher, recovering all the loss from the low of ₹268.2. Though the daily candles on the chart give mixed signals, the weekly candles are relatively positive. Support is in the ₹272-271 region. As long as the stock remains above this support zone, there is a strong likelihood of it breaking above the near-term resistance level of ₹279. Such a break can take ITC initially higher to ₹285 or ₹287. A further break above ₹287 will increase the possibility of the stock extending its up-move towards the 21-week moving average resistance level of ₹293. The bullish outlook will get negated if ITC breaks and closes decisively below ₹271. The stock can, thus, fall initially to ₹267. A bounce from ₹267 can take the stock higher to ₹271 and ₹272 again. But a strong break below ₹267 will increase the downside pressure. This will then increase the likelihood of the stock tumbling towards ₹262 thereafter.

Infosys is retaining its strength. The stock was up for the third consecutive week. It surged 3.6 per cent, breaking above the key resistance level of ₹687 and closed on a strong note. The outlook is bullish. Immediate support is at ₹698 and the next key support is at ₹688. Also, there is an inverted head and shoulder pattern visible on the daily chart. This is a bullish reversal pattern. The neckline support of this pattern is at ₹684. Intermediate dips in the near term are likely to find fresh buyers coming into the market. An up-move to ₹721 is likely in the near term. Inability to breach ₹721 can trigger an intermediate pull-back move to ₹700. But an eventual break above ₹721 will boost the momentum. This will increase the likelihood of the stock revisiting ₹740 and ₹750 levels. Traders can go long at current levels and also accumulate on dips at the levels of ₹701 and ₹693. Keep the stop-loss at ₹675 for the target of ₹760. Revise the stop-loss higher to ₹715 as soon as the stock moves up to ₹730.

RIL fell for the second consecutive week. The stock was down about 2 per cent last week. However, the sharp bounce from the week’s low of ₹1,055 gives a breather for the stock. The 200-day as well as a trend-line, both poised around ₹1,055, has provided strong support for RIL. The near-term outlook is mixed. Resistance is at ₹1,128. If RIL manages to sustain above ₹1,100 and decisively break above ₹1,128, the near-term outlook will turn positive. An up-move to ₹1,160 is possible. A further break above ₹1,160 will increase the likelihood of the stock targeting ₹1,185. On the other hand, if RIL declines below ₹1,100, it can fall to ₹1,055 again. A further break below ₹1,055 will increase the likelihood of the fall extending to ₹1,030 or even ₹1,010 thereafter. Broadly, RIL has been range-bound between ₹1,050 and ₹1,200 since October. A decisive breakout on either side of ₹1,050 or ₹1,200 will determine the direction of the next move. Traders can stay out of this stock until a clear trend emerges.

Tata Steel snapped its three-week fall. The stock reversed higher from the low of ₹486.9, recovering all the loss and closed 1.1 per cent higher for the week. Though the stock has bounced back, the price action seems to be lacking strength. This leaves the bias negative and keeps the broader downtrend intact. Cluster of resistance is poised in the ₹530-540 region, which can cap the upside in the near term. If Tata Steel manages to breach ₹540, an upmove to ₹565 and ₹570 is possible. But while below ₹540, a fall again to ₹485 and ₹480 cannot be ruled out. A bounce from around ₹480 again can keep the stock range-bound between ₹480 and ₹540. But a strong break below ₹480 can drag Tata Steel lower to ₹460. The level of ₹460 is a crucial long-term trend support, which may have the potential to halt the downtrend that has been in place since the beginning of this year. As such, the price action around ₹460 will need a close watch to get a cue on the next move.

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