Technical Analysis

Weekly Trading Guide

| Updated on June 22, 2019 Published on June 22, 2019

SBI (₹349.45)

SBI fell about 3 per cent in the initial part of the week. However, the stock managed to claw-back from the low of ₹333.75, recovering all the loss and closed 1.6 per cent higher for the week. An immediate resistance is at ₹352 for the stock which can be tested in the near future. A strong rise past this hurdle will take the stock higher to the next crucial resistance level of ₹362.

As mentioned last week, SBI has to breach ₹362 decisively to gain fresh bullish momentum and target ₹390 and ₹400. But a pull-back from ₹362 can drag SBI lower to ₹350 again. In such a scenario, the stock can remain range-bound between ₹335 and ₹362 for some more time. On the other hand, if SBI fails to surpass the immediate resistance level of ₹352, it can fall to ₹335 again. In that case, SBI can trade between ₹335 and ₹352 for some time. The stock will come under pressure if it declines below ₹335 levels. Such a break can take the stock lower to ₹325-320. The region around ₹320 is a strong long-term support and a further fall below it is unlikely.

 

ITC (₹274.2)

ITC continued to trade lower and has declined below ₹275 as expected. The stock was down 1.3 per cent last week. The outlook is bearish. Strong resistance is in the ₹280-282 region, which has been capping the upside over the last few weeks. Intermediate support is at ₹272.5. If this support holds, a range-bound move between ₹272.5 and ₹282 is possible for some time.

However, the bias will continue to remain negative as the indicators on the charts are negative. The 21-day moving average has crossed below the 100-day moving average as expected. This indicates that the downtrend is intact and the upside could be limited. An eventual break below ₹272.5 will bring renewed pressure on the stock. Such a break below will increase the likelihood of it tumbling towards ₹265 and ₹260. The levels of ₹262 and ₹257 are crucial long-term supports. The current downtrend is likely to find a bottom around these levels. A strong bounce from these supports will mark the beginning of a long-term uptrend in this stock.

 

Infosys (₹750.7)

Infosys has been stuck inbetween its support at ₹735 and resistance at ₹759 over the last couple of weeks. Within this range, the stock fell to ₹735 and bounced sharply from there to close 1.4 per cent higher last week. The 21-week moving average support level of ₹735 has held very well as expected and keeps the bullish view intact.

 

The immediate resistance level of ₹759 is likely to be tested in the near term. The bias on the chart is positive. The 21-day moving average has crossed over the 55-day moving average. This is a bullish signal, which indicates that Infosys is likely to breach ₹759 and rise to ₹770 and ₹775 again. Inability to break above ₹775 can drag the stock lower to ₹755 and ₹750 again. Such a pull-back move will keep the broader ₹695-775 sideways range intact. The stock has been stuck in this range for a prolonged period of time since mid-January this year. On the other hand, if Infosys manages to surpass ₹775 decisively, it will gain fresh momentum and target ₹795 and ₹800 thereafter.

 

RIL (₹1,279.2)

As expected, RIL declined below the psychological level of ₹1,300. The stock was down about 3 per cent last week and closed decisively below the 21-week moving average level of ₹1,309. The level of ₹1,300 will now act as a strong support-turned-resistance and cap the upside. As long as the stock trades below ₹1,300, the outlook will remain negative. RIL has to rise past ₹1,300 decisively to negate the bearish view and rise to ₹1,320 and ₹1,350 levels again.

But such a strong up-move looks unlikely now. As such, a fall to ₹1,240 can be seen in the near term. If the RIL stock manages to bounce from ₹1,240, a relief rally to ₹1,300 is possible. But a break below ₹1,240 will then increase the likelihood of the fall extending to ₹1,220 and ₹1,200. The region between ₹1,220 and ₹1,200 is a strong long-term support for the stock. A further fall below ₹1,200 looks unlikely as fresh buyers are likely to emerge at those levels. A strong bounce from ₹1,200 may indicate the beginning of a fresh leg of a long-term uptrend for the stock.

 

Tata Steel (₹497.75)

Tata Steel tumbled over 7 per cent intraweek, but managed to bounce-back, recovering almost all the loss. The near-term outlook is unclear. Support is at ₹492 and resistance at ₹506. A breakout on either side of ₹492 or ₹506 will decide the direction of the next move.

A break above ₹506 will ease the downside pressure. Such a break will take the stock higher to ₹515 and ₹520. The region around ₹520 is a crucial long-term resistance, which has to be breached decisively to turn the outlook bullish. A break above ₹520 can take Tata Steel up to ₹530. But if the stock breaks below ₹492, it can fall initially to ₹475. A further break below ₹475 will then increase the likelihood of the stock revisiting ₹465-460 levels. Tata Steel can trade in a wide range of ₹460-520 in the coming weeks. A breakout on either side of ₹460 or ₹520 will set the direction of the next move.

 

The writer is a Chief Research Analyst at Kshitij Consultancy Services

Published on June 22, 2019

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Sincerely,

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.