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

SBI plummets breaking key base levels

The stock of SBI nose-dived almost 10 per cent last week, decisively breaching key supports at ₹250 and ₹233 levels. This fall has strengthened the stock’s intermediate-term downtrend. The short-term trend is also down. The stock trades well below its 50 and 200-day moving averages. The indicators on the daily chart feature in the bearish zone. However, the stock’s next key supports are placed at ₹220 and ₹210 levels. This could provide a breather for the stock, which has been on a free-fall. Traders with a short-term perspective can hold their short position with stop-loss at ₹233 and exit at around ₹210. On the other hand, an emphatic rally beyond ₹233 could lead to an upmove to ₹240 and then to ₹250. To alter the short-term downtrend, the stock needs to conclusively break ₹260 levels. Such a break can take the stock higher to ₹290 levels in the medium term. Supports below ₹210 are at ₹200 and ₹190 levels.

I TC moves sideways with a negative bias

After encountering a key resistance at around ₹331 in early August, the stock of ITC started moving sideways in the band between ₹315 and ₹331. Last week, the stock fell 3.4 per cent, testing the lower end of the band. The near-term bias is negative for the stock. The daily price rate of change indicator now features in the negative territory implying selling interest. Other indicators on the daily chart are trending downwards, supporting the bearish sentiment. Therefore, traders with a short-term perspective should tread with caution and initiate fresh short positions on a decisive fall below ₹315 with a stop-loss at ₹320 levels. Such a fall can pull the stock down to ₹305 and then to ₹300 levels in the short term. Conversely, the stock may continue to move sideways for a while. An emphatic breakthrough of the upper boundary at ₹331 is required to reinforce the bullish momentum and take it to ₹340 or ₹350 levels.

Infosys breaches a key base level

Infosys declined 3.3 per cent, conclusively breaking a significant medium-term support level at ₹1,100 last week. Since registering an all-time high at ₹1,163 levels in mid-August, the stock has been on a short-term downtrend. The daily price target of change indicator now hovers in the negative territory indicating selling interest. Both the daily and weekly relative strength indices are trending down in the neutral region. The stock’s medium-term uptrend, which commenced in July after hitting a low of ₹932, is under threat now. ₹1,060 is a crucial level, which will decide the trend. A strong fall below this level will strengthen the ongoing decline and pull the stock down to ₹1,030 and then to ₹1,010 levels in the short term. Traders can consider initiating fresh short positions on a fall below ₹1,060 levels with a stop-loss at ₹1,080 levels. On the other hand, the stock has key resistances at ₹1,100, ₹1,120 and ₹1,140 levels.

RIL resumes its downward move

The stock of Reliance Industries extended its downfall by declining 4 per cent in the week gone by. Since recording a 52-week high at ₹1,067 on July 23, the stock has been on a medium-term downtrend. Even the short-term trend is down. While trending down, the stock breached key supports and the 200-day moving average. It now trades well below its 50 and 200-day moving averages. Both the daily and weekly relative strength indices now feature in the bearish zone. The daily as well as weekly price rate of change indicators hover in the negative terrain implying selling interest. However, the stock has a significant long-term support in the ₹800-820 band. Traders holding their short positions can consider exiting at this support band. Only a decisive fall below the ₹800-820 range will strengthen the downtrend and pull the stock to ₹775. Key resistances are placed at ₹850, ₹870 and ₹900 levels.

Tata Steel in a near-term downtrend

Last week, the stock of Tata Steel continued its downtrend declining 4.2 per cent with heavy volumes. The stock is on a downtrend across all time-frames — long, medium and short term. Nevertheless, the stock has a significant long-term support in the ₹195-200 range. The moving average convergence divergence indicator on the daily chart shows positive divergence implying that a trend reversal is possibly on the cards. Traders with short and medium-term perspective should tread with caution in the coming weeks as the stock may test the support zone. The stock’s immediate resistance is placed at ₹230 and the next one at ₹250. A decisive upward breakthrough of ₹250 is needed to alter the short-term downtrend. Resistances beyond ₹250 are at ₹265 and ₹280 levels. But a fall below ₹195 will keep the downtrend intact and drag the stock to ₹175 levels.

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