Technical Analysis

High Five: SBI, Infosys, Reliance, ITC, Tata Steel

BL Research Bureau | Updated on January 16, 2018 Published on September 10, 2016





SBI (₹264)

SBI opened with a gap-up and surged 6.8 per cent intraweek to reach a high of ₹271.55. But it lost sheen in the final trading day of the week and reversed to close at the 61.8 per cent Fibonacci retracement level of ₹264. Immediate support is at ₹260 which might be tested in the initial part of this week. A break below this support can drag it to ₹255 initially. Further break below ₹255 can take it to ₹250 or even ₹245. But such falls will be a good opportunity to accumulate long positions as the broader view is bullish. Also, the presence of the 100-week moving average support at ₹246 may limit the downside in the stock. On the other hand, if the stock manages to reverse higher from the immediate support at ₹260, it can rise to ₹270 and ₹275 thereafter over the short term. It will also increase the possibility of the stock targeting ₹290 or even ₹300. Medium-term investors can hold the longs. Accumulate on dips near ₹250 and ₹245. Revise the stop-loss higher to ₹210 from the earlier ₹205 levels.

Infosys (₹1,036)

Infosys breached the key 21-day moving average resistance in the past week. But the stock failed to sustain higher and reversed from the high of ₹1,058.5. The ₹1,010-₹1,060 sideways range that has been in place over the last four weeks remains intact. The stock can retain this range for some more time. The broader view is bearish. The upside is expected to be capped to ₹1,075 even if the stock manages to break the current range above ₹1,060. The downside pressure will ease only if the stock manages to surpass this hurdle at ₹1,075. Such a break can take the stock higher to ₹1,100. But the possibility of such a rise is less at the moment. Having said that, Infosys is more likely to break the psychological support of ₹1,000. This can drag it to ₹930 — the 200-week moving average support or ₹913 — the 50 per cent Fibonacci retracement level. A reversal from these supports may trigger a corrective rally to ₹1,000 and ₹1,050. But a break below ₹913 will increase the danger of the fall extending to even ₹850.

RIL (₹1,043.7)

RIL rose 3 per cent in the past week. The immediate outlook is bullish, with a possibility of a rise to ₹1,070. A break above ₹1,070 can take it to ₹1,090. If the stock manages to break further above ₹1,090, it can rise to ₹1,015 thereafter. The price action around ₹1,100 will need a close watch as the stock has been struggling to breach this psychological level over the last couple of years. A reversal from ₹1,090-₹1,100 zone may trigger a fall to ₹1,050 or even lower levels thereafter. The region between ₹1,000 and ₹995 and then the level of ₹985 are the crucial supports for the stock. There is nodanger of any sharp fall unless RIL declines below ₹985. However, a strong break below ₹985 may increase the downside pressure and drag it to ₹950 or ₹940. But from the charts, a fall below ₹985 looks unlikely at the moment. Investors with a medium-term perspective can make use of dips to go long near ₹1,010. Stop-loss can be placed at ₹970. Accumulate longs near ₹1,000 and also near ₹990 in case of a fall below the level of ₹1,000.

ITC (₹258.7)

ITC tanked 2.5 per cent on Friday, giving up all the gains made during the week and closed 1.4 per cent lower for the week. The resistance at ₹266 mentioned last week has held very well. As indicated last week, this reversal from ₹266 has increased the possibility of the stock revisiting ₹250 levels in the coming days. Immediate support is at ₹255. A break below it can take ITC lower to ₹250. But if the stock manages to move higher from ₹255, it can rise to test the resistance at ₹266 once again. A strong break and a decisive close above ₹266 is needed for the stock to gain fresh momentum and rise further. Such a break can take it higher to ₹270 initially. Further break above ₹270 will open doors for a fresh rally to ₹290 or ₹293 over the medium term. Long positions can be initiated near ₹255 with a stop-loss at ₹235. Accumulate more longs near ₹250 if the stock extends its fall below ₹255. The 55-day moving average at ₹251 is a key near-term support to watch. A break below it can drag ITC lower to ₹240 thereafter.

Tata Steel (₹394.5)

Tata Steel surged to a new 52-week high of ₹408.5 on Thursday. But the stock gave upsome of its gain on Friday and closed 5.6 per cent higher for the week. The broader bullish view remains intact. Immediate support is at ₹390. If the stock fails to break above ₹400, it may fall to ₹385, ₹380 or ₹375. The 21-day moving average at ₹380 and a trend line support at ₹375 make this region a strong support area for the stock. A fall below ₹375 looks less likely in the near term. Investors with a short-term perspective can initiate fresh long positions on dips near ₹375. Stop-loss can be placed at ₹340 for the target of ₹430. On the upside, a key resistance is at around ₹410. A strong break above it can take it to ₹416 — the 100-week moving average resistance. Further break above ₹416 will see the rally extending to ₹431 — the 61.8 per cent Fibonacci retracement level in the short term. Medium-term investors may continue to hold the long positions and retain the stop-loss at ₹310.

Published on September 10, 2016
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