Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on February 03, 2019

SBI (284.3)

SBI made some wild swings last week. The stock gained about 6 per cent intra-week and made a high of ₹302.35 on Friday. But it reversed sharply lower, giving back all the gains made. The near-term outlook is mixed. The price action in the coming week will need a close watch. Immediate support is in the ₹282-₹280.5 region and the next vital support is at ₹275. A dip to test these supports is likely in the near term. Whether SBI declines below ₹275 or not will determine the next move. A strong break below ₹275 will increase the downside pressure and keep the near-term downtrend intact. Such a break can drag the stock lower to ₹265 and ₹260 on the back of fresh selling. But, if SBI manages to bounce from ₹275, a recovery rally to ₹290 or ₹295 is possible. A break above ₹295 can take it higher to the ₹305-₹307 zone.


ITC (₹280.8)

ITC snapped its two-week fall. The price action last week indicates that the stock lacks strong sellers and is getting fresh buyers in the ₹275-₹273 region. Key support is at ₹272. A slump below ₹272 can drag the stock to ₹265-₹264 band. But as long as ITC trades above ₹272, the outlook will remain positive. A strong break above ₹285 will take it up to ₹289. A further break above that will then increase the likelihood of the stock targeting ₹301 . Inability to breach ₹301 can trigger an intermediate corrective fall towards ₹295 or ₹290. However, the overall outlook will continue to remain positive. As such, an eventual break above ₹301 will see ITC targeting ₹308 and ₹310. A break above ₹310 will pave way for ₹320 and ₹325. Investors who have taken long positions at ₹282 and ₹278 can hold it. Retain the stop-loss at ₹262.

Infosys (₹756.5)

The upmove in Infosys is gaining momentum and it surged over 3 per cent last week. Immediate support is at ₹745 and next is in the ₹720-₹715 region. Though an intermediate pull-back move to test these supports cannot be ruled out, a fall below ₹715 is unlikely. Fresh buyers may emerge at lower levels and limit the downside. The indicators on the charts are also positive. A rally to ₹800 and ₹810 looks likely. The strong rally last week also confirms the inverted head and shoulder bullish reversal pattern on the daily chart. This leaves the possibility high of the stock targeting ₹830 — the target level of the reversal pattern. Medium-term traders can hold the long positions taken at ₹722. Retain the stop-loss at ₹678. Revise the stop-loss higher to ₹735 as soon as the stock moves up to ₹765. Book profits at ₹815.

RIL (₹1,247.3)

RIL tumbled over 4 per cent intraweek. However, it managed to claw back from the low of ₹1,190.55, recovering the loss in the final two trading days of the week. The support in the ₹1,200-₹1,190 region has held well. The bounce-back from the low of ₹1,190 last week indicates that the stock is gaining fresh buying interest around the psychological level of ₹1,200. This keeps the bullish outlook intact. The 55-day moving average is now on the verge of crossing over the 100-day moving average. This is a positive signal, indicating that the downside could be limited in the short term. Resistance is in the ₹1,265-₹1,270 region. A strong break above ₹1,270 will see the stock surging to ₹1,330. The outlook will turn negative only if RIL declines below ₹1,190. A corrective fall to ₹1,140 is, thus, possible.

Tata Steel (₹473.4)

Tata Steel was up 4.6 per cent last week. The upward reversal is technically significant as it happened from the 200-week moving average. The price action will need a close watch to get a cue on whether the on-going downtrend has ended or not. Immediate resistance is at ₹480. A strong break above it can trigger a corrective rally to ₹500 and ₹530. But an inability to breach ₹480 can trigger a pull-back move to ₹450 and ₹440. A range-bound move between ₹440 and ₹480 is possible. The region between ₹440 and ₹430 is a crucial support zone. The stock will come under pressure again, if it declines below ₹430. A fall towards ₹400 will be bearish from a long-term perspective. It will then increase the possibility of the stock tumbling towards ₹300 levels over the long term.

Published on February 03, 2019

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